Breath - just breath - some days that is...
Whether you’re buying your first home or your first property is an investment, the fundamentals are the same.
Twelve years ago I decided it was time to start taking control of my financial future and I put together a savings plan and a set of long-term goals. Ten years ago I bought my first home; now I have many investment properties. The property portfolio I have today will be worth double what it’s worth now in another seven to 10 years because I’ve bought all my properties with the same fundamentals.
I speak to hundreds of people each year through seminars, workshops and as clients who are looking at buying property and creating a portfolio that allows them to essentially make money while they sleep. Let’s face it, who can even think far enough ahead to imagine retirement? But the reality is that with a few fundamental rules applied to your first property purchase you won’t have to be hanging out until you’re 70 to put your feet up.
Unlike in our parents’ time, first homebuyers today aren’t buying a property that’s going to fit them for many years to come. Your first property is essentially a stepping stone that’s going to be the key to how fast you reach your financial and personal goals.
Although I usually speak about how to locate and buy an investment property I consider the lessons just as relevant to first homeowners, as in reality their first property is even more so an investment in their future. Getting the fundamentals of that property purchase right could mean the difference between retiring at 50 or 70.
3 fundamentals of your first property purchase:
1. Start with the end in mind
So what is the end goal? Okay, 30 to 40 years down the track is a long way away so let’s bring it in a bit – what is your goal for the next five years? How does a property purchase now fit into that goal? What type of property is going to assist you in getting to that goal sooner?
Until you can answer these questions don’t waste your time every Saturday looking at 10 properties because you’re running around without purpose.
2. Locate the right property, not necessarily the right home for you
When our grandparents and even some parents bought their homes they were planning for that property to be the family home for years to come. Let’s be honest, with the median priced property these days, you’re only going to be able to afford a two-bedroom unit. This property isn’t where you’re going to plan to bring the grandkids back to in 30 or 40 years – this is a stepping stone only. So buy it with the fundamentals of buying a property investment, not a home. In other words, leave the emotion out.
3. Be flexible
Life throws curve balls at us. So it’s not only important to consider any purchase with the long-term plans for that property in mind but be aware things can change. The property has to be flexible enough to cater for that. Research shows that the rise of single person households is going to be a potential driver of the future property market but these people want to live in two-bedroom properties. So if you have to sell or rent the property out then cater to what the majority of the market wants.
In summary first homebuyers have so much opportunity to set themselves up for a comfortable future and, thanks to the government, they also get a helping hand. Thinking strategically and with the end in mind will bring you a lot closer to what you want to achieve. It’s just about getting started the right way.
Jane Slack-Smith is the director of Investors Choice Mortgages. She’s a mortgage broker and runs property investing courses throughout Australia. Visit:www.stepbysteppropertysuccess.com.au for details.