He and my mum are wanting to acquire another investment property. They're not quite ready to go it alone (don't want to over leverage themselves) but he wanted to know if I would consider going halves.
Now I have a third share in a house already, with my parents and my older brother. My older brother and I are not listed as owners, in order to allow us to claim benefits later on when we did buy our own place.
However, my dad said that this time, we would both be listed as owners on the mortgage. I would live in the house rent free until such time when I was sent elsewhere for my job (about two and a half years). We would then rent it out.
My parents would supply the deposit and then everything else would be split fifty-fifty. When I was ready to buy my own house, I would also be able to utilise the equity in this place.
So what does everyone think of that? I don't think there is anything wrong with it, I would just really like to buy a place on my own, I don't feel as independent if I don't. Is that silly? Please give me your thoughts!
Hi I just discovered your blog and I've added you to the blogs I follow and it's nice to read about someone closer to home, well across the ditch and closer to my age :). I've read through some of your old posts and it just seems as though financially you may not be ready to purchase a home. You really need a fully funded emergency fund and would need to prepare a full analysis on how much your share will be and whether your budget can handle it. Yes, you may be able to afford it but without a proper emergency fund it may not be a wise move. What if something happens to the house which requires costly repairs, your parents will probably be happy to pay but will you feel like your making it on your own? Also on your previous post with those figures there is no way you should purchase a home especially without a fully funded emergency fund. Back in February you visited a mortgage broker and they said you only needed a 5% deposit this is definitely not enough then the bank will own 95% of your house. Personally I feel you should have atleast a 20% deposit for the purchase of your first home, this means you own more of the house and your mortgage payments will be less. Think about all those underwater homes in the states, with only a 5% deposit it wouldn't take much to put you in their position. I know you feel like purchasing a house is important but your only 21 it would be wiser for you to work and save hard for a couple more years before taking that leap so that your in a more stable position financially. Hope that helps.
ReplyDeleteSpeaking as someone who has missed out on ever owning a home, I would take the opportunity to buy this home along with your parents, if you are going to be staying there rent free for 2 1/2 years you will have ample time and money to build up your Emergency fund. If I had my time again I would take the bull by the horns and take up Dad,s option, and thank your lucky stars for such awesome parents.
ReplyDeleteFound your blog from your post on World of Wealth. Read all your old posts, so you've got yourself another reader.
ReplyDeleteAbout buying an investment property. It's hard to give advice without more information about the properties you're thinking about buying? Are they cash flow positive or are you subsidizing them and hoping for them to go up in value? You mention living in one for awhile rent free and then taking the equity out to buy your own place. Living rent free is a great deal if it doesn't make your investment partners jealous, it probably wouldn't fly with any partners other than your parents. When you say take equity out do plan on refinancing or would you sell?
A general comment. I noticed you like to have very detailed budgets and that's great. You have to use a system that works for you. Personally I pay myself first with savings, mortgage, etc and then don't worry too much about where the leftover goes. If I get low on money at the end of the month I cut back on my spending. My saving goals get met and I don't have to spend hours tracking every little expense.
Great blog, enjoyed reading it.
Thanks everyone! I think you bring my total readership to about five!
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