Your Investment Property forum is the place for positive industry interaction and welcomes your professional and informed opinion.

20 year old looking to invest in melbourne

Notify me of new replies via email
G | 25 Jun 2013, 10:56 AM Agree 0
Hey, I am 20 years old, and have saved around 100k, so have around 500 thousand to spend on an investment property in Melbourne. I have recently started uni, so my income has dropped considerably, to around 20k per year. I was wondering if anyone had any advice as to what kind of property to invest in, and where? I personally have been looking at South Yarra 1 or 2 bedroom units, at around 450-500k, yielding at around 5-6%. Im predominantly looking for capital growth, but with a low income I do not want to be under a lot of pressure to make repayments until i finish my degree.

All thoughts and tips would be much appreciated.
  • Emma | 25 Jun 2013, 12:22 PM Agree 0
    Hi G,

    I just came across your posting coincidentally. I'm a property consultant who works for an investor centric property research company that assists investors like to yourself. Happy to provide you with more information on opportunities that lie within strong capital growth areas. With your income has your mortgage broker or bank confirmed your borrowing capacity?
  • Eos Property | 25 Jun 2013, 05:53 PM Agree 0
    Congratulations on your level of savings. I am afraid you may not like what I am about to say.

    In your situation the last thing I would be doing is buying an investment property. I say this with your interests upper most in my mind.

    In my experience South Yarra will get you a negatively geared property.

    On $20K/annum your ability to use any negative gearing 'advantages' are severely curtailed and your personal contribution will be enormous. This is more the case with the upcoming changes to tax scales - from July 2013 your total tax payable will be $342/annum. This means any shortfall on your property will have to be met from your resources.

    Secondly. Under NCCP guidelines a lender is required to make sure any loan product they provide you with should not create any financial distress to you.

    Now I am not a broker but I reckon on $20K your borrowing capacity is going to be severely curtailed.

    So what options do you have?
    1. Rethink your desire for growth - and maybe look at something with more cashflow.
    2. Continue saving like crazy and wait until you are back in stable employment and then look at your property options.

    Sometimes 'waiting' is the best option.

    Obviously the third option is to ignore what I have said.

Post a reply