How to buy an investment property while you're still young.
Buying your first investment property is generally considered something you should do later in life, when you have more disposable income and you've built up some experience in buying and selling property - usually your family home. While there is nothing wrong with purchasing investment properties later in life, there is no reason why you can't start investing in property when you're still young.
Entering the investment property market at a younger age is not only possible but many would say has a far greater benefit. You shouldn’t let the lack of a six-figure salary or experience in the market hold you back, as long as you’re prepared to make some short term sacrifices, starting your own portfolio is a genuine opportunity. However, as to be expected, it’s not without its challenges.
Those following the Real Estate market over the last couple of years would have seen how quickly property prices have risen in a fairly short period of time. According Realestate.com.au, the median house price in Melbourne between December 2015 and 2016 increased by 32.7 per cent. If you had purchased a house at the start of 2015 for $500,000, by the end of that year it's value is likely to have increased by around $150, 000 - in just 12 months! That is great news for those who purchased at the start of 2015, but very concerning for those who missed out.
Here are a few tips to help you start your property investment journey while you’re still young.
BECOME DEBT FREE
Credit cards, car finance, personal loans.. the list goes on. If you have any kind of debt, it's time to pay it off. Make a list of all the debt you have, include car loans, personal loans or even credit cards. All of these things can stop you from being approved for a mortgage.
LOWER YOUR LIVING COSTS
If you are serious about investing in property and setting yourself up for later in life, you'll need to start making some sacrifices. This might include downgrading your car, missing out on a few holidays or staying home to watch Netflix instead of heading out to a bar or for expensive dinner each week. A good tip is to make a list of exactly how you spend your money each week and look at areas you can cut some costs.
Bank Managers and mortgage brokers will be looking to ensure you can afford to make the repayments on your loan. Aside from ensuring the loan repayments will be affordable, lenders will also want to look at your recent bank statements to ensure you are a consistent saver. Try and get in the habit or setting aside a set amount of money each week in a separate savings account or an account you can’t easily access.
Although many people consider home ownership as unaffordable, there are still suburbs in Melbourne where you can get into the property market as an investors relatively cheaply. These suburbs might not be where you 'want' to own property but they can still offer you strong capital growth and rental yields - they may not be prestige suburbs but can offer fantastic growth in the years to come.
While it does involve sacrifice, property investment still presents an opportunity for anyone, regardless of your age but one thing is for sure, the sooner you start your property investment journey, the more time you'll have for your property to grow in value.