Getting into the property market is difficult these days, but it is not impossible if you are prepared to do the hard work and make a few sacrifices.
Here are our tips for young investors wanting to enter into the property market.
- Develop the right mindset. Think of property as a long-term commitment. Start thinking about your long-term financial independence and this takes time. If you are looking to get rich straight away, then you will be disappointed.
- Set a realistic budget – finding the home of your dreams is a lovely sentiment, however, you will need to be practical and consider whether the property is worthwhile going into debt. Set a budget and stick to it.
- Keep a good credit record. Ensure that you pay bills past on time. If you are continuously late with your bills, this won’t help you when trying to purchase an investment property. Recent changes to Australia’s credit reporting system mean that if you miss a bill payment – it may recorded on your credit report.
- Understand tax. If you have invested in a property, now is the time to get serious about your taxes. Seek specific, tailored advice for your personal circumstance and make sure to choose an accountant who specialises in property tax, Many first time investors would not be aware that travel and accommodation expenses incurred to inspect or maintain your rental property are generally tax deductible.
- Make a habit of saving. Although saving may seem like an impossible task while you’re young and starting out, lenders look for evidence of consistent savings over time, so it’s important to start now. Get into good savings habits from an early age by putting aside a select amount of money from your income each week – and make sure you stick to it no matter what. You will need to meet lenders guidelines and will generally need to show savings of at least 5% of purchase price plus costs.
- Learn to negotiate. Many young investors lack the ability to negotiate a property’s price. It takes a lot of confidence to be able to negotiate a price, but if you can you have a much better chance of getting a better deal.
- Realise that your social life will change. You will need to be prepared to give up some things including taxis, new clothes, holidays, expensive social events and restaurants. Replace nights out at restaurants by visiting friends at their home with a bottle of wine.
- Be in it for the long term and taking advantage of growth cycles. The more time you spend in the property market, the more profitable your asset becomes. If you invest young, you have the luxury of sitting out any market downturns, and realising the value hike of numerous growth cycles.
The whole process can be exciting and also daunting.
Talk to us today about how we can help you get into your first home sooner.