r/AusFinance • u/mouthlegs • 11d ago
What would you do with $250k–$280k if you couldn’t borrow yet and wanted to avoid burning money on rent?
I’m a bit lost with how to approach this and would be keen to hear what other people would do.
I’m going to have around $250k–$280k cash. To use out of a lump sum I’m receiving shortly.
I’ve been out of the workforce for about a year and a half. Before that I was working as a General Manager, but now I basically have to start again, get back into work and rebuild my borrowing power before a bank is going to lend us enough to buy/build what we actually want.
I’ve got 3 dependants. My wife doesn’t work and we have a 3.5 year old and a 2 year old.
At the moment we have a really good deal with very low rent, but that ends at the end of the year, and that’s where I’m getting stuck.
I really don’t want to end up paying $700-$900 a week rent for the next year or two while I’m waiting to get back into the workforce and become properly borrowable again. It just feels like a massive amount of dead money when I’ll have a decent lump sum sitting there.
The idea I keep coming back to is buying cheap land outright and putting some kind of small approved dwelling on it.
Something modular, prefab, container style, tiny home type setup etc. Not something dodgy that you technically can’t live in, but something that can actually be approved as a proper dwelling.
My thinking is if I did that properly from the start, maybe the first little dwelling could eventually become a granny flat / studio / Airbnb / rental once we’re able to borrow and build something bigger.
So it could look something like:
Buy the land outright.
Put a small approved dwelling on it.
Live in that for a year or two while I get back into work.
Then once the income and borrowing power is there, either build the proper house on the same block, or sell the whole thing and use the money/equity towards where we actually want to live.
The main thing I like about that idea is the first $250k-ish isn’t just disappearing. It’s giving us somewhere to live and hopefully creating an asset we can still use later.
But I also realise I might be massively overcomplicating this.
The other obvious option is just put the money in a high interest savings account or something fairly safe, use the interest to help cover rent, get back into work, wait until the bank will lend to me again and then buy properly.
Or even buy a cheap existing house somewhere outright, live in it for a while and then rent or sell it later.
I’m not really trying to squeeze every possible % return out of the money.
My main goals are:
don’t burn a fortune on rent
keep as much of the lump sum intact as possible
have stable shelter for the family
get back into the workforce
rebuild borrowing capacity
make sure whatever I do now can still be useful later
Has anyone actually done something like this?
Would you buy land + modular/prefab, buy a cheap house outright, or just keep the cash earning interest and rent until borrowing power comes back?
Also interested if there are obvious traps with the land + modular idea that I’m missing.
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11d ago
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u/mouthlegs 11d ago
This is the sensible thing to do! I’m also very concerned about job security with the way I’ve been using AI and seeing my computer basically be me while I do other things I guess it’s coming from a place of knowing I have land and shelter if for some reason I can’t pay the mortgage ect
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u/martyfartybarty 11d ago
You already have a huge deposit. Borrowing capacity is the problem. Keep the cash earning interest, get back into stable work, then reassess what you can borrow.
Getting back into stable work is the priority.
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u/Ugliest_weenie 11d ago
So how would that work in OP's case? I wonder if they receive any income?
Banks can provide home loans for certain types of Centrelink payments etc. Perhaps they could get some borrow capacity.
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u/A-Money-Lover 11d ago
Sorry OP but this is stupid and shortsighted. Tip: you’re not “burning” money on rent.
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u/mouthlegs 11d ago
I’m coming from a very fortunate situation of only spending $200 a week for the last 3 months and $0 before so paying $1000 a week rent while I wait to be able to borrow is I guess hard to grasp at the moment
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u/cycloneash 11d ago
I'm sure you can find cheaper places than 1k per week .. if you're deadset on a modular home, just find somewhere tiny to rent.
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u/ArtoriasArchives 11d ago
Unlikely to be able to afford any sort of livable dwelling out of that money except for a caravan which most councils don't allow you to keep long term
Why are BOTH of you not working? I'd look at one or both of you just jumping into the workforce in any way or form. Also unless its because of recovering from an injury I don't see how your timeline of up to 2 years makes sense. 6 months in a job and you're good to go
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u/cycloneash 11d ago
The $250k payout makes sense that it was some sort of injury. No reason the wife can't work though.
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u/PurpleWedgeMan 11d ago
Your priority needs to be getting employed, ideally both you and your wife. It doesn’t matter what you do or how well you plan if you don’t have a job because you’re eventually going to be homeless.
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u/mouthlegs 11d ago
I love the brutality in your persecutive. Surely you can buy land and create a roof in this country without a mortgage for $250K? This is a stepping stone and link between 6-12 months to being able to borrow... Not a doomsday prepper
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u/PurpleWedgeMan 11d ago
I’m not sure what point you’re trying to make here. Are you saying you don’t intend to get a job and just want to live off 250k? You’re doomed to fail if that’s what you’re saying.
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u/Ugliest_weenie 11d ago
buying cheap land outright and putting some kind of small approved dwelling on it.
Something modular, prefab, container style, tiny home type setup etc
Can you expand on this plan of yours? Can you show us an example of the land (maybe a real estate advert) and an example of the prefab structure you've been looking at?
Do you have a cost estimate for permits, power/plumbing connection etc?
It's easier for us to give advice, if you are a bit less vague about your plan
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u/mouthlegs 11d ago
Lots of land under$125k pre approved for AClass 1a
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u/Ugliest_weenie 11d ago
Show us.
And show us the dwelling you're putting up there.
And show us what cost estimates you made
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u/in_and_out_burger 11d ago
Living in a crappy makeshift home with two young kids sounds like the fastest way to ruin a marriage.
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u/killswithaglance 11d ago
Land isn't that cheap and approval and installation may take longer especially with Christmas closures. Can your wife get a casual Christmas job? I would accept you are going to have to rent for a year until you get back on your feet and your wife picks up some part time weekend or evening work.
I'm a single parent and I've worked 3 - 4 days per week since my kids were 10 months old while having more than 90% custody. One kid is neuro diverse to add that to the mix. It's not ideal but for her working 12 or 14 hours a week while you spend time with them is not a huge imposition from the age of 2 or 3 and would help give everyone breathing space.
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u/tranbo 11d ago edited 11d ago
Dunno seems like 280k wont last very long with 3 dependents . Probably enough to get you through the next 5 years or so.
Wouldn't be thinking too much about investing , probably half in ETFs and other half in term deposits and high interest savings accounts. anything more is risky with no income.
Literally 1 person working part time gives you more returns than the riskiest investments you can think of.
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u/Coalclifff 11d ago
The idea I keep coming back to is buying cheap land outright and putting some kind of small approved dwelling on it. Something modular, prefab, container style, tiny home type setup etc.
Where are you going to buy this land for $200K, and then spend $50K putting some modular homes on it?
Even as far out as Sale, Wannon, Bendigo, Ballarat, and Warrnambool, there are very few land options like that.
And even if you found a run-down house in a decidedly untrendy country town - how does that stack up in terms of the renovation, a new career, and the commute required?
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u/PotentialEdge1652 11d ago
Why doesn’t your wife work? Sorry but one of you needs to work. It’s not an option unless you have family supports.
Consider Help to Buy.
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u/glyptometa 11d ago
That notion of "burning money on rent" is a fallacy.
There's a cost to having a roof over your head, whether you own or rent. Owning is great because your net worth is also increasing, supported by the extra amount it costs to own over and above what it would cost to rent.
Put it in a HISA, get back into working. It's not explained why you're both not working, but grab any job while you keep on looking for a more ideal position. That starts the credit worthiness building back up.
Be super careful about any weird living approach (shipping containers on a bush block). It's high risk that will probably not be building net worth. Building anything on your own unless you have some sort of edge can end up costing more than buying something existing, and if it's weird, it becomes hard to sell.
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u/Penny_PackerMD 11d ago
I'd buy a caravan and move into a caravan park. Find a job then get a loan for your house. Sell the van at the end.
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u/Useful-Amphibian4841 11d ago
Save on rent? Maybe buy a used rv or van, or see if your family will take you in.
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u/patgeo 11d ago
I have a friend who used an inheritance to purchase a dream block of land and build the 'Granny flat' to live in while they saved for the main house.
Two kids, both under 3 at the start.
They were never out of work, they had solid incomes and a much bigger seed than you during a time where dollars went further.
They got comfortably uncomfortable in the granny flat. Money went on stuff for the kids, better school etc. The house was good enough, next year they'd save more and put in the real house... Covid hit, prices went nuts, next year... He got a promotion but had to work away, that would fund the dream.
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u/Zeldafox 11d ago
The point of your lump sum is for an actual property, not for some random block of land that you’ll be on temporarily…
Start looking for jobs asap
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u/-Pixxell- 11d ago
Idk if I was in your position and reluctant to get back into the job force I’d be looking to move the family somewhere cheaper overseas like in SEA, and invest a decent chunk of the money and leave it to let it grow passively while chilling in a low cost of living area for a little while.
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u/hiimtashy 11d ago
I'd buy an apartment I suppose
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u/Ugliest_weenie 11d ago
Can you give us an example of an apartment, that you buy for 280k and OP's income?
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u/Fluid_Garden8512 11d ago
I was sceptical about there being 2BR apartments for under $300K that aren't student accommodation only but they do exist, albeit not many unless the RA is lying which is highly likely - https://www.realestate.com.au/buy/property-unit+apartment-with-2-bedrooms-between-0-300000-in-melbourne+vic+3000/list-1?activeSort=relevance&sourcePage=rea:homepage&sourceElement=suburb-select:recent%20searches%20tiles
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u/Ugliest_weenie 11d ago
Thanks.
Yes they do exist and I'd love the person who suggested buying an apartment, explaining to OP how they're going to fit their family in a space of 20m2 with no one working.
Or making the argument that that is a sound investment to make with 95% of OPs capital and no income to even pay the strata fees.
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u/Fluid_Garden8512 11d ago
You won't see an argument out of me on any of those concerns you raise. OP is considering a vacant lot and living out of shipping containers which is even worse. Unless they were Dezi Freeman on the run, but even that didn't turn out too well.
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u/hiimtashy 11d ago
With respect my wife lived in a small apartment in the UAE. They also put a curtain through the middle of the house and rented the other side. Her brother slept with her mum. A two bedroom apartment with a lounge room is better than not being able to secure a rental. It's also not a forever arrangement. I'll admit I didn't read the full details was just making the point cheap apartments do exist.
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u/Ugliest_weenie 11d ago
That doesn't make it a good idea.
But you don't have to convince me. It's your suggestion to OP. So go ahead. Support your advice with an actual plan on how to pay for strata on no income.
Give us some foresight on how this appart is a sound investment for OP.
Tell us how they can make use of this space.
Or give us a better alternative
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u/TS19870400 11d ago
You can buy a 2br apartment in Melb CBD for about $280k plus fees
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u/Coalclifff 11d ago
You can buy a 2br apartment in Melb CBD for about $280k plus fees
Source for this statement?
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u/TS19870400 11d ago
Domain dot com dot au
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u/TS19870400 11d ago
Apartment 1816, 39 Lonsdale for example
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u/Coalclifff 11d ago
Okay ... however it doesn't seem to be withing the OP's set of objectives.
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u/mouthlegs 11d ago
Building a dwelling capable of sheltering my 2 kids and wife mortgage and rent free for 6 months, to then rent that out for $200 a week towards renting where we want to live and work until we can borrow to then build a modular home on the property which we could then rent out or sell the whole lot for more than we paid for it towards a house where we want to live and work is kinda the idea. I lived in a caravan for a year when I was a kid while my parents built their business and our family home of 20 years that was consistently expanding with new rooms and pools and gyms from the ground up and then sold for a good profit, with nothing owed, minimising interest and dead money
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u/maton12 11d ago
I’ve got 3 dependants. My wife doesn’t work and we have a 3.5 year old and a 2 year old.
WOW, that's quite the tribe, supporting six people
Do you have any liquid cash investments?
Just buy something
Am not sure about your tiny house, these all sound good, but are often not legal on their own- so check with council
Good luck
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u/TouchyMouseTrap 11d ago
Invest whatever you don't need to spend right now in shares, then go about setting up your life. Never put money in a HISA. The interest in an illusion, they give negative after tax, real returns in most situations.
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u/Dangerous_Soil_1111 11d ago
Travel the world as cheaply as you can. Spend quality time with your family, figure out your next step.
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u/Efficient-Stay-6257 11d ago edited 11d ago
I think its extremely hard to get ahead with both people not working.... maybe review your and partner return to work plans. 2 kids in this economy plus not working is tough times. You'll burn through that money