With house prices booming, you’d be forgiven for thinking that you’ll never get your foot on the property ladder. But all is not lost, according to the experts.
Below are 6 practical and achievable tips on how to break into the market before you turn 30.
1. Start saving as early as possible
Those who start a savings plan from the time they get their first job at 15 or 16 (or even earlier) are generally the ones who break into the market first. More than being about how much they’ve saved; it’s about having developed a concept about money and the discipline of getting into the habit of saving. The experts advise setting up an automatic savings plan, even if it’s only taking 10 or 20 per cent of your wage.
2. Ask your parents to go guarantor
As long as you can prove that you have the capacity to pay the mortgage every month, having parents go guarantor for you isn’t as risky as it may seem. If your parents have invested well, they could potentially have over $1m in equity sitting in their property that could be used as collateral to help you buy a property. That means they don’t have to come up with cash to assist. Naturally, you would need to have an open and honest discussion with your parents about this, such as working out the entry and exit arrangements and the risks involved.
3. Stay at home & don’t rent
Renting is expensive. There’s not only the weekly rent to consider but also the bills and groceries etc. to pay for. Staying at home can enormously fast-track your ability to save for a deposit, as long as you save your money diligently. Even while paying board to contribute towards the household expenses, some can save as much as $30,000 to $40,000 a year when living at home. You may yearn for your independence, but this is a strategy definitely worth considering.
Rentvesting is a term for renting in a suburb you want to live in and buying, then renting out, a property somewhere cheaper. It’s about living in a home that satisfies your lifestyle preferences and buying from an investment perspective. Perhaps you can afford to buy a one-bedroom apartment in a suburb known for its good rental returns and that has the potential to grow in capital gain due to future population growth and infrastructure plans. This can be an excellent strategy to get into the market before 30, as long as you do your research carefully.
5. Buy with a friend or family member
Owning 50% of a property is better than not owning a property at all. If you can’t afford to go it alone, consider joining forces with a trusted friend or family member, such as a sibling. This type of property purchase does carry some risks, so it is important that you set it up like a business arrangement, with all the right legal documents in place.
6. Ditch the ego
If you’re worried about what people may think about you based on where you’ve chosen to buy, stop worrying. There is absolutely nothing wrong with buying in a less popular suburb. In fact it makes perfect sense to do so as there is commonly great potential in a suburb’s so-called ‘poor cousin’.
Last but not least, remember that your first home is unlikely to be your forever home. Think of it as a stepping stone to your dream home. Getting your foot on the property ladder is what counts.