For the under 30s - how I got my house

[numbercruncher]

Forgot to mention Im in the Y generation, currently travelling all over the place, shopping and eating out but I still have a decent chunk of savings in my bank account that will allow me to pay for the deposit for 2 houses. It all comes down to being responsible with your spending and learning how to save at an early age. People that winge are those in denial and doesn't have the courage to live up to a change. Life is not meant to be easy, I wasn't born rich but I'm still what I am today. Life is what you make of it, so start doing something about it!!!

Its easy to be single a relatively well off, its a different ball game for people with familys etc, 110k required income for a family to own a house in Melbourne and worse in other states, only ten years ago that income only needed to be 43k. An average family in Melborne would be paying 400 rent, 300 Food/Sundries, + Petrol, School fees, Insurance etc etc etc, A grand after Tax needed before they can hope to save a bean, add another 300+ if they have a mortgage.

Yet people just say dont be lazy get a 2nd job get a 3rd job, at what cost? Kids not seeing their parents, being raised by childcare centres and after school care, drop em off at 6 months old collect them at 18 years. Yet people do this, work seven days virtually never see their kids and carry on like its normal!! Madness!

Australias middle class in getting poorer and the rich are getting richer, a few more generations like this will see us run the risk of being third world where 90pc of wealth is in 10pc of the hands.

I find the amount of people who say well its their fault for not financially planning enough, did you forsee this realestate boom and accompanying inflation thats doubled prices in like 5 years? I sure didnt when I bought a house on the gold coast in 2002 and then sold it for 100pc profit in 2004, and if we did know this was going to happen we would all be multi millionaires wouldnt we?

I fail to see how people dont understand the housing system is failing young familys and close to crisis point in major cities.

 

[krisbarry]

I bought/built a house in late 2002/early 2003, and have paid it off. This is how I did it. As prices have gone up a bit where I am (SE Qld) since then, it might take you another year (or you could just have a small mortgage).

All well and good in a booming market, but doubt you could pull this same trick again now!

Ask the baby boomers if the banks would lend them the money to buy their own houses now...the bank would tell them to get stuffed.

My mum bought a house in 1999 for $150,000 same house now 8 years on is worth over $400,000. She wouldn't even qualify for a loan of that size.

Ya get my drift!

 

[Julia]

Really interesting thread which shows those whose focus is on what can be done, and those whose focus is on what cannot be done.

Sincere congratulations to those of you who have done so well at an apparently young age - your energy and positive attitude are a great example.

Julia

 

[chops_a_must]

I bought/built a house in late 2002/early 2003, and have paid it off. This is how I did it. As prices have gone up a bit where I am (SE Qld) since then, it might take you another year (or you could just have a small mortgage).

Pretty much anyone with an education/trade could do this. You can't be too risk averse.

I'm 33, classic X-er, spent all my money in my early 20s and racked up the credit card debts. I discovered early on that I am a terrible saver, but am quite good at paying off debt when required.

I went to London, got a job, and lived pretty cheap (plenty of people live cheaper) I worked as an accountant, boring as hell but good money.

I discovered early on that I am a terrible saver, but am quite good at paying off debt when required. So instead of trying to save a deposit (which required self-discipline), I got some credit cards (so easy to do in the UK) and cash advanced GBP30k. (Yes it took a while!) Then I switched to new cards every 6 months and kept balance transferring to new 0% intro deals so I didn't have to pay interest.

With that A$75k I bought a block of land on the NSW far north coast, not on the beach, a not particularly fashionable area. This is what I could afford. I was earning GPB52k/year so I paid off the land in just over 12 months (here doing the same job I would earn about A$70k so that gives you some idea of the better money that can be made in London in some (not all) professions).

After the first year (A$75k paid, land owned), I did the same cash advance thing again. So I had A$75k in cash to start building a house, and I got an Australian mortgage for $75k. My dad did the owner-building thing and we used every mate and mate's mate and cost cutting exercise we could to build a 2 story brick 4 bed 2 bath house for about $145k.

I also bought a tiny flat in London on a 100% UK mortgage, renovated from 6pm to 1am every day for 4 weeks, and sold it for about A$60k profit. I found the buying/selling costs in the UK to be lower than here so doing a turnaround on a cheap property easier to do than here.

I paid off the UK credit cards in the second year, then moved back to Oz in 2005. I didn't like being an accountant (being an X-er - you know we don't like to stick to anything LOL!) so I borrowed A$100k against the house and started a bar - it wasn't rocket science, anyone could do it, but it was long hours and hard work. I sold it after a year for $300k.

So now I have paid off the house and have $100k. (Mind you, I still rent myself as it's cheaper than owning in my chosen suburb LOL!)

I don't relate the above to show how amazingly sensational I am, far from it, I am fairly ordinary (albiet having a uni education).

I relate it to show how easy it is to do. Being a an 'in demand' profession in the UK helps, but there are lots of them - accounting, IT, plumber (pretty much any trade). I know a lot of people working in finance/accounting/business jobs who don't have those quals - there are plenty of jobs in not so nice areas that pay well which the more qualified won't do - in fact my first job was one of these. Science types might struggle same as they do here.

Hope this is useful to someone who thinks a property is out of their reach - it's not.

Riesling

Or... you could have saved all this effort and done what my girlfriend's best friend did today, i.e. get her mum to buy her an apartment.

WTF!?! Lol!

 

[numbercruncher]

Really interesting thread which shows those whose focus is on what can be done, and those whose focus is on what cannot be done.

Sincere congratulations to those of you who have done so well at an apparently young age - your energy and positive attitude are a great example.

Julia

So simplistic isnt Julia,

Its all about those who focus on the can and those who cannot?

These Guys here bought before the boom and the homes have probably trebled and the other cliams to have enough for a "deposit" on two homes, the next generation has no chance of this happening in the next 10 years, there buying into a scam, there is no way that 500k homes are going to become 1.5m homes like you guys have enjoyed in the next 5/10 yrs. They will be lucky to even grow enough over costs and Inflation.

Its so easy to sit on the fence and reckon everything is alright just cause its alright with you and those around you, its seriously a nightmare for some people out there, it seems you people just dont understand, a home mortgage is 110k PA min in Melbourne, worse elsewhere.

Forget these "amazing" stories that originated before the boom, they are common, any bum could of bought a house on a AVERAGE wage 5/10 yrs ago.

 

[Stan 101]

Interesting post, Riesling. Without spoiling the party, can I just mention that many credit cards will now not let you roll over cash advances and give you an interest free honeymoon. I've spoken to a few people who thought they would try that trick and got burnt when they were paying the full rate on cash advances from day one.

Numbercruncher, sometimes things aren't fair. I don't have children, but I imagine that if I was sweating to live and keep afloat in Melbourne I'd move.
I don't know the real estate market down there, but there are still absolute bargins around. Just purchased a 2 bed and sleepout tin and timber post war place for $140k rented at $210 per week. Walking distance to a seemingly nice school and the the major shopping centre in a region city in SEQld.
That was an exceptional buy, but the point is, there are places to move to.

What is the obsession with the coast in Australia? Personally I like to be near it as I have a passion for SCUBA. If it wasn't for that and I had children, I'd move further inland and find a lovely community to bring up my kids in a warm community atmosphere. They'd have bush and other outdoors to play in and get up to the harmless mischief children should. But now I'm preaching.

Yes, the cities are expensive, now. It will even out in time and then one day there will be another boom. There will be another industry other than mining that will take hold of people's sense of greed/prosperity/whatever and the cycle will start again. If the cities are too expensive to allow you the life you would like to lead, I'd suggest you move to a more affordable location.


Cheers,

 

[nomore4s]

So simplistic isnt Julia,

Its all about those who focus on the can and those who cannot ?

These Guys here bought before the boom and the homes have probably trebled and the other cliams to have enough for a "deposit" on two homes, the next generation has no chance of this happening in the next 10 years, there buying into a scam, there is no way that 500k homes are going to become 1.5m homes like you guys have enjoyed in the next 5/10 yrs. They will be lucky to even grow enough over costs and Inflation.

Its so easy to sit on the fence and reckon everything is alright just cause its alright with you and those around you, its seriously a nightmare for some people out there, it seems you people just dont understand, a home mortgage is 110k PA min in Melbourne, worse elsewhere.

Forget these "amazing" stories that originated before the boom, they are common, any bum could of bought a house on a AVERAGE wage 5/10 yrs ago.

Well thats just bad luck numbercruncher, life's just not fair sometimes. The next generation will just have to wait 10 years or so, big deal. If they spend that time saving and preparing they will be in front when the next boom/cycle happens. Home ownership isn't the be all and end of of life. I just don't get the attitude of some of the posters, why do they think that it's thier god given right to have everything they want when they want it?
It's all a choice if you're not happy do something about it, move cities, change careers, save hard, take time to learn how to invest/trade better, increase your earning power. Give yourself whatever you need/do what you have to do too open doors and create oppourtunities for yourself. And if you don't want to do the hard work and make the sacrifices required, well that's your choice.

 

[numbercruncher]

Good post Stan 101,

I actually dont live in Melbourne, I recently relocated from QLD to Rural Victoria. Im assuming the property you purchased was somewhere between Gympie and Maryborough? Your probably getting a better return on your investment than any recently purchased investment property in the country, but in perspective you would get the same return from the 140k sitting in a bank account.

What happens when every family that earns less than 100k pa leaves major citys? When all the lower paid workers go, Secretarys, Cleaners, Cab Drivers, Mechanics, council workers etc etc etc and go to regional and rural Australia, It would be a nightmare, in the long term Wages in Citys need to rise dramatically or Home prices need to drop dramatically IMHO.

 

[Mousie]

Dare anyone think, just maybe, that...

House ownership is overrated?

How do you make your investment decisions? Based on what gives you bang for your buck, right?

If you can get better returns on stocks, why buy a house and have council rates, land taxes, independent valuation fees, legal fees, stamp duty (probably not if you build your own), body corp fees if you get an apartment/unit, financing fees and interest on a loan if you get one, and all these before mentioning putting up with inefficient tradies if the s**t hits the fan? Oh yes, I nearly missed out the part where you actually buy the house: dealing with less than honest real estate agents!

Any other negatives I missed out on?

Those above alone are enough to drive me crazy!

Talk about having a sense of financial and emotional security eh?

I'd definitely wait till I can comfortably plonk 100% cash down for my house and still have huge amount of leftovers to invest. And it had better be a steal; the prices in Australia don't make financial sense anymore, not from a forex perspective anyway...

Look, I don't like having a landlord/landlord's agent looking over my shoulder every now and again, I value my privacy as much as the neighbour next door. But that's a small price to pay for having to deal with such a huge disruption to my bank balance and especially, my normal way of living when I wanna buy a house. There're just so many middlemen out to get a piece of you when you just want a bloody place to call your own.

You pay so much, yet you just get a whole lot of a different type of hassle; that's the way I see it.

I'm half ranting and, hopefully, half making sense here...bottom line is I just don't like what I'm seeing in the property sector. If I'm gonna buy a property it'd be to live in; I most likely won't involve myself on the investment side of it, if ever. The returns for the work put in just don't match up.

 

[darian]

I totally agree with nomore4. It was never easy for anyone. You think it was easy for me save my money?? NO, i don't think so. Its through hard work and dedication and learning about the share market at a young age. Ive done this because I don't want to be left out of the next property boom like my parents did. Back in 1986, a 3 bedroom house only cost $80,000 in the city, if my parents were more investment savvy and bought a few of these we'd be millionaires by now. But in those days they thought it was too expensive. If people always have the perception that houses are overpriced, they will never get anywhere. Who knows when the next boom will be?? Property will never be too expensive!!
If you're worry about your kids not being able to afford a home, think twice. They are in a country that provides quality education and excellent living conditions, they will never starve to death if they work hard and earn a uni degree!

 

[crash82au]

I think if a war breaks out real estate might become more affordable. Which country do we not like?

 

[Lucky]

I think if a war breaks out real estate might become more affordable. Which country do we not like?

Tasmania

 

[numbercruncher]

I think if a war breaks out real estate might become more affordable. Which country do we not like?

LOL yes if our yankee cousins decide its time to smoke Iran, Oil will shoot over $100 and the chain reaction will probably make for a sticky situation!

 

[macca]

I do think that a lot of people lose sight of the fact that just because you want to buy something NOW, doesn't mean that NOW is the best time to buy it.

We are on a stock forum full of ups and downs and waves etc etc, ALL investments do the same thing.

When real estate got too dear in the major population centres, the stock market started to climb, coincidence ? probably not

If it costs a lot more to buy than rent, then rent and invest in something else.

It is all about PATIENCE, something that young people of every generation are usually short of

 

[Stan 101]

but in perspective you would get the same return from the 140k sitting in a bank account.

Number, not quite. Or not anywhere near quite, actually.

With cash in bank, one does not get the 50% discount on CGT if held for more than 12 months like one does with shares and property.

Property depreciates and one can claim tax relief to this end. Bless their cotton socks.

The loan is deductable and with a small deposit, that house purchased 1 month ago is positively geared and is paying itself off. (exclude unforseen maintenance.)
Addons like new fence and bathroom cost little outlay but allow me more equity after a revalue by a bank.

Big difference to money in the bank.


Enjoy the move though.


Cheers,

 

[Julia]

On the suggestion of moving to where prices are more affordable, I'm just now looking at my local real estate paper and, just as an example - there are plenty like this - is the following:

Near new 3 bedroom plus study
2 Living Areas
Ensuite to main bedroom
Rendered Brick
Double Garage
Fenced 853 sqm allotment

$298,000.

It's in a beachside suburb of Hervey Bay, a fast growing, beautiful town on the Qld coast, about 2 and a half hours north of Brisbane, population a bit over 50,000.

Julia

 

[Kauri]

Good post Stan 101,

I, but in perspective you would get the same return from the 140k sitting in a bank account.

A longer term look at returns..

 

[stockpanther]

On the suggestion of moving to where prices are more affordable, I'm just now looking at my local real estate paper and, just as an example - there are plenty like this - is the following:

Near new 3 bedroom plus study
2 Living Areas
Ensuite to main bedroom
Rendered Brick
Double Garage
Fenced 853 sqm allotment

$298,000.

It's in a beachside suburb of Hervey Bay, a fast growing, beautiful town on the Qld coast, about 2 and a half hours north of Brisbane, population a bit over 50,000.

Julia

Hervey Bay is pretty much the retirement capital of Qld.

 

[numbercruncher]

On the suggestion of moving to where prices are more affordable, I'm just now looking at my local real estate paper and, just as an example - there are plenty like this - is the following:

Near new 3 bedroom plus study
2 Living Areas
Ensuite to main bedroom
Rendered Brick
Double Garage
Fenced 853 sqm allotment

$298,000.

It's in a beachside suburb of Hervey Bay, a fast growing, beautiful town on the Qld coast, about 2 and a half hours north of Brisbane, population a bit over 50,000.

Julia

Funnily enough Julia I built and sold a house in Craignish last year, Hervey Bay is great (relative) value and a beautiful place but it also has one of the highest unemployment rates in the country.

So even in Hervey Bay I dont see how people do it comfortably, 300k mortgage = 500p/w before anything else! And Hervey Bay wages that a whole income.

That being said i would recommend to anyone to live there, I may even move back some day!

 

[CanOz]

Funnily enough Julia I built and sold a house in Craignish last year, Hervey Bay is great (relative) value and a beautiful place but it also has one of the highest unemployment rates in the country.

So even in Hervey Bay I dont see how people do it comfortably, 300k mortgage = 500p/w before anything else! And Hervey Bay wages that a whole income.

That being said i would recommend to anyone to live there, I may even move back some day!

Wouldn't it be a great place to live and trade full time!

Now, back to saving and trading part time.

Cheers,