Purchaser profile:

• Two sisters have decided to purchase an investment property and are house sharing with one other, non-related, person. While their aim is to hold the investment for the long-term, they acknowledge they may need to sell it if their life situation requires it.
• Julie: 27 years old, working as a police officer Victorian Police, annual salary of $68,000 (annual increases are expected with experience and promotion, but promotions require further study)
• Emma: 32 years old, working as a construction manager on a salary of $105,000 per year.
• Together they have saved $68,000 as a deposit and their parents have offered a further $80,000 gift towards the deposit. The parents have said they do not wish to have their gift returned if it goes directly towards the purchase of a property.
• The house they are renting costs $500 per week rent and this is divided by three. Household expenses are shared equally between the occupants. For the purposes of this calculation, assume the third person is earning an annual salary of$61,000.

ADDITIONAL NOTES

1. All incomes provided in each scenario must have PAYE tax deducted as part of the financial analysis to determine the net (after tax) income
2. All household expenses are to be calculated at 37% of net income. This amount DOES NOT include rent, if applicable
3. Deduct a further 10% contingency allowance from remaining balance for unexpected expenses

Question:

Based on this information, What are the sisters budget?

NB: Be sure to look up taxation levels and research bank lending requirements. You need to consider ability to repay loans and loan to value ratio requirements and additional cost if you exceed 80% criterion.