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Reproduced with permission.
So, you’d like to buy your first property but don’t know where to start? There are many things you should consider to get started, but I’ve outlined five basic tips to make that first step a bit simpler.
1. Find secure employment
It’s a very tough lending market at the moment and banks are keen to lend to people who are a low risk. Having a steady job is one indicator you’re a safe bet. It’s easier said than done but there are a few things you can do to land a job. Firstly, consider gaining new skills or upgrading your qualifications. A few certificates or some letters after your name can fast track your path to secure employment.
2. Save a deposit
Once you have an income, you can start putting some aside money for a deposit. A common trend is young people staying at home for as long as they can, paying little or no board and stashing the cash they would’ve spent on rent, electricity, etc.
If you could save $300 per week by staying at home, this would add up to approximately $15,000 in one year. A $15,000 deposit won’t get you far but two years worth of savings ($30,000) plus the First Homeowner Grant (FHOG) and other government initiatives could be enough to get your foot on the investment ladder.
You should be saving regularly and aim for a five per cent deposit. Also keep in mind you’ll need another five per cent to pay fees. Remember, the FHOG and many other concessions apply only if you’re buying a home to live in, not an investment property.
3. Get property educated
You need to ensure you have a very good idea of what you’re doing, where and what you’re buying, and so on. The best way to do this is to educate yourself. Some simple and low cost (or even free) things you can do include reading books, subscribing to magazines like Australian Property Investor, visiting blogs (like you are now!), attending seminars and joining online forums.
If you’re prepared to spend some more money, you might consider enlisting the services of a reputable and unbiased adviser, enrolling on a course or paying for a buyers agent to research and purchase property on your behalf.
Be careful. There are many spruikers who cleverly disguise their high-pressure sales pitches as ‘education seminars’. One indicator you’re being sold to instead of educated is a workshop that heavily promotes off-the-plan apartments for investment purposes.
4. Mix with likeminded people
Talking with property owners and investors helps you to develop the right mindset. You can also pick up useful information from people who’ve bought real estate before, learn from their mistakes and take heed of any tips they have. Finding these people may seem difficult but they are all around you. You’re probably living in a home your parents bought. Speak to them about property. Real estate agents are also often more than happy to talk to you about property.
If you’re struggling to find someone to share their experiences, do a search on the internet. There are many property investment groups that get together on a regular basis.
5. Just do it!
Once you have secure employment, a deposit and some solid knowledge of what to do, just do it! I’ve found too many people suffer from ‘analysis paralysis’. These are people who do hours and hours of research and in the end don’t buy anything. Why? They’re searching for the perfect property. I don’t know if the one and only perfect property actually exists but I can say for sure there are many very good properties.
Another thing I can say for sure is that it’s impossible to secure your financial freedom and create wealth if you don’t actually buy something!
Happy House Hunting!
Written by Peter Koulizos, university lecturer, author and buyers advocate.
