Getting Into Property – An Alternative Approach

There has been much media comment lately about the Australian property market, much of it focused on the high prices being paid, especially in Sydney and Melbourne. This media conversation is bemoaning the likelihood that young Australians will never own their own homes like their parents did, and that they are being priced out of the market by investors.

Property Opportunities Available Outside Sydney and Melbourne

Like all such conversations it has some merit, but it is also ignoring the huge diversity of property available in Australia. It also concentrates its argument in two relatively small geographical locations, albeit those containing a significant proportion of our total population. In our other capital cities and large regional centres, properties are being snapped up by first home buyers and investors at reasonable prices.

How do we know this? We are the Fountain Property Group, a one stop solution for people interested in building an investment portfolio. Over the years we have been in business, we have heard many reasons why people think they can’t buy a home. With the right advice, these reasons can all be overcome.

Stable Income and Savings History a Good Start

The first issue is, naturally enough, having a sufficient and stable income that would give a lending institution the confidence to approve a home loan. The next factor is having a reasonable deposit firstly to avoid paying mortgage insurance, and also to demonstrate your ability to maintain a regular savings pattern over time.

Could Tenants in Common be the Answer?

Both these considerations apply equally to an owner-occupier, or to someone interested in purchasing an investment property. Another way to mitigate the risk, should something unexpected happen, is to purchase property with two or more other stakeholders under a legal structure called tenants in common.

If each party contributes an equal amount they become tenants in common in equal shares. If one or more parties contribute a larger or smaller share, they become tenants in common with shares in proportion to their contribution. There are some other issues that need to be discussed, but this is a viable way for people to purchase a home, particularly an investment property.

Good Properties at Affordable Prices in Regional Centres

The other factor that many people do not consider is the location where they want to buy. If it is for a home to live in, obviously that must be near employment. If, however, they are starting a property portfolio, there are many locations throughout the country, other than the capital cities, where they can get started. Wherever there is a demand by tenants for housing, there is opportunity for investors.

This, and other advice such as ownership structures, cash flow and management, is available to our clients at the Fountain Property Group. Anyone with a reasonable debt history and regular income can own property.

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First Home Buyers: How to Save Up For Your First home

Planning for your first home is perhaps the biggest financial commitment you will make in your life. Getting it right the first time is crucial, so it is best to have a financial plan laid out to help guide you as you get on your way to achieving the home of your dreams.

Budgeting

Have a clear and practical amount in mind. Although saving up for your first home will not happen overnight, make sure you understand how much you need, and how much you will have to set aside to get there. Start small and see what expenses you can live without and cut down on debt that you don’t really need. You’ll be surprised at how much you can save.

Planning

Always have a financial plan in mind, outlining your short and long term goals. You may want to also include a debt management plan to free yourself from debt before you start saving up for your first home.

Saving For Your Deposit

If you’re planning to save up for your first home, you must be prepared to follow your savings plan religiously. If you can save up 10% of each paycheck without having to miss any of your financial responsibilities, do so. Start cutting down on your splurges and pay only for what you really need.

Be Realistic

Owning your first property will not happen overnight, but with a carefully laid out plan and a good team of advisers behind you, reaching your goals of having the home of your dreams is not impossible. Lenders nowadays would like to see a clear picture of your financial health, so make sure you have everything covered to show them genuine savings.

Negative Gearing Can Help First Home Buyers: AMP Chief

First Home Buyer shares have dropped drastically in the property market, hovering around the 12% mark while Property Investors dominate the market. Negative gearing has often been pointed out as a factor that hinders First Home Buyers from entering the property market because of house price inflation, but a leading economist believes that in this lies the solution for enticing First Home Buyers back into the market.

AMP chief economist Shane Oliver believes that First Home Buyers can purchase their first property strategically as an investor by negatively gearing the property. This is the same concept they used when purchasing their first home. Their mortgage was paid off by rental income and mortgage write-offs from negative gearing.

He is encouraging First Home Buyers to follow suit, but as with any investment, consulting a financial adviser will help avoid any pitfalls with this strategy.

Read more about this on the Smart Property Investment website.

First Home Buyers Struggle Continues

First Home activity is still down despite low investor activity. First home Buyers accounted for a new record low in total borrowings at 12.3%, below the previous low of 12.5% posted October of last year.

52,912 owner-occupied home loans were accounted for last November, increasing by 1.1% for the month. Total dwellings have increased by 1.7% to $26.9 billion. Despite the increase in these numbers, First Homebuyers remain at mediocre levels, where in New South Wales first homes accounted for just 7.4% of dwelling activity, slightly above the all time low of 6.8% recorded last September.

Read more about this on the Age website.