Tips for climbing the property ladder
2015-07-06WITH property prices predicted to rise by up to 10 per cent or more in some parts of Australia this year, it is going to become even more difficult for young people to get started on the property ladder.
Focus on the positives
Property is getting more expensive, but what better reason can a young person have to initiate a plan? Once they have bought, they are likely to make a reasonable profit soon after.
Keep an eye on the prize
Set yourself a goal while trying to picture the dream of what life would be like once you have bought a property. Unless you really commit to that goal, and without a big dream in place, it’s likely that you’ll give up at the first hurdle.
Pain to power
If you get into the market at the age of 20, by the time you’re 30 a $500,000 property could have risen to $750,000 or $1 million that will set you up for life.
After a few years of ownership, you might be able to withdraw some of the equity to buy property number two and even number three before the 10 years is up.
Start saving
The sooner you get into the routine of taking money from your wages before you spend it, the better. Property prices rise quicker than you can save, so you need to commit as much as you can to the plan.
You will need at least a 5 per cent deposit and 5 per cent of the property’s cost for stamp duty and legal fees, therefore aim for $30,000 to $60,000 for a property costing $300,000 to $600,000.
If you’re saving $1000 a month, you need a plan B because by the time you save a deposit, the property could cost $50,000 more.
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 in the past and are now reaping the rewards of their action.
If all of those extra wages go towards saving a deposit, within 12 months you could be there.
Think back to your goal and dream. Is it worth a year of pain to set you up for the future?
Consider a joint venture
If you are on a low salary and already working hectic hours, you might need a joint venture where you team up with your parents, a sibling, a colleague or even a stranger to buy together.
If you have no deposit or ability to service a mortgage, but you have the time to learn the fundamentals, read books, search for a property, do the negotiations and oversee the property management, those issues could be your advantage over a high-income earner.
Have a solicitor draw up a legal agreement to highlight what happens to the property and who pays what if you fall out.
Plan ahead
Use the time it takes to save a deposit to research. There are books, newspaper articles, magazines, seminars and TV programs to help build your knowledge, and then it’s time to hit the streets.
It takes at least 50 to 100 property inspections to familiarise yourself with an area.
Reward yourself
Reward yourself while you are saving and working hard or you risk becoming disconcerted.
Source: news.com.au
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