Ask the ex­perts

It’s a de­cent de­posit but this cou­ple may have to look fur­ther afield for a prop­erty

Money Magazine Australia - - CONTENTS -

NAME: Ale­cia Green

STA­TUS: Mar­ried and wants to buy a prop­erty.

QUES­TIONS: With an $80,000 de­posit, how much can Ale­cia and her part­ner bor­row? Is there a lender that is more re­cep­tive to lend­ing to a busi­ness owner? Should they buy in Syd­ney or in a re­gional area such as the NSW South Coast, or in Ho­bart and rent it out or run it as Airbnb? Where is the best place to keep their sav­ings so they are eas­ily ac­cessed? Is it bet­ter to pay down HECS debt or put the money into the de­posit?

AN­SWERS: Rentvest­ing makes good sense. Ja­son Petersen sug­gests a prop­erty worth $300,000 while Jane Slack-Smith reck­ons it could go up to $550,000. Look into the First Home Su­per Saver Scheme, which al­lows you to salary sac­ri­fice sav­ings for your home. Don’t worry about your HECS debt.

With tighter lend­ing for prop­erty in­vest­ing, is the “rentvest” strat­egy still vi­able for cou­ples such as Ale­cia and her hus­band Hamish? They have the per­fect skills to be a dy­namic ren­o­va­tion duo. Ale­cia stud­ied de­sign and ran an award-win­ning in­te­rior de­sign busi­ness. Hamish has an ar­chi­tec­tural de­gree and two years ago qual­i­fied as an elec­tri­cian. “We would love to buy some­thing that we could ren­o­vate – even a derelict place as we are both quite re­source­ful,” says Ale­cia.

But Syd­ney prop­erty prices are so steep that they can’t re­ally af­ford to buy there un­less it is in an outer sub­urb or a one-bed­room or stu­dio unit closer to the cen­tre. Should they buy in a re­gional area such as

the NSW south coast, or in Ho­bart where they can rent out the prop­erty or use it as an Airbnb? “Or do we buy a block of land and build?” won­ders Ale­cia.

Be­cause they have run their own busi­nesses and Hamish has been study­ing, they don’t have the fi­nan­cial pro­file that lenders pre­fer. So they have been rent­ing. But Hamish’s new elec­tri­cal busi­ness is tak­ing off and his earn­ings should grow.

Is there a lender that un­der­stands this type of sit­u­a­tion?

Ale­cia says they are sav­ing hard, build-

ing an emer­gency buf­fer and pay­ing down their credit cards.

Hamish has a big HECS debt of $65,000 while Ale­cia owes $13,000.

They have a de­posit of $80,000 and won­der if it is enough to buy a $700,000 unit in a sub­urb like Camp­sie in south-western Syd­ney. Where is the best place to keep the de­posit while they add to their sav­ings?

Ale­cia says that they need a fi­nan­cial plan for the fu­ture, par­tic­u­larly to con­sider long-term goals. She salary sac­ri­fices $70 a fort­night to su­per.

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