How to get your foot in door
$500,000 property could have risen to $750,000 or even $1 million-plus.
It’s going to take some sacrifice if you’re going to buy a property, as it’s going to need a reasonable deposit.
Even with tenants in that investment property, there will be a difference between the rent and the mortgage that will need topping up from your salary. Start saving:
The sooner you get in the routine of taking money from your wages, the better.
Property rises quicker than you can save and consequently you need to commit as much as you can into the plan.
You’ve also got to be realistic. You’re going to need at least a 5 per cent deposit and 5 per cent for stamp duties and legalities – therefore you’ll likely need $30,000-$60,000 for a $300,00-$600,000 property. Work for it:
Get a second job or even a third, fourth or fifth job – it might sound absurd but it is what people have endured to get into the market and are now reaping the rewards.
It doesn’t have to be forever but if all of those extra wages can go towards saving that initial deposit, within 12 months you could be there. Joint ventures: the pros and cons:
If you’re on a low salary and already working hectic hours, you might need to look into a joint venture.
This is where you team up with your parents, a sibling, a colleague or even a stranger to buy a property together.
The best joint ventures are when everyone wins and when everyone plays their own part.
It is much better to own 50 per cent of a property than 100 per cent of none at all.
So, if you’ve got no deposit or ability to service a mortgage, but you have the time to learn the fundamentals, read lots of books, search for a property, do the negotiations and oversee the ongoing property management, then that could be your advantage over a timepoor, high income earner.
Always get a solicitor to draw up a legal agreement and highlight what happens to the property and who pays what if you both fall out. Take your time and plan ahead:
Do as much research as you can. You want to ensure your first purchase is as successful as possible. If you end up buying a lemon, you might have to start the process over again.
It takes from 50 to 100 property inspections to familiarise yourself with an area and know which are the good ones. Then you will need to track the final sales prices to get an understanding of what you’ll get. Make time to reward yourself:
It’s important to reward yourself along the way when you’re saving and/or working so hard, as otherwise, you may risk becoming disheartened or just jaded.
Set milestones and reward yourself with the occasional night out with friends, an overnight trip away or other such enjoyable activities.