How to invest in property as a young person
Although many savvy investors are in their 30s or 40s, it’s still possible to invest in property as a young person in your early 20s, it just might take a bit more time, persistence and harder work to get there.
Today, people are becoming far more independent and want to become much more successful than ever before. We now live in a world where we are surrounded by the latest technology gadgets, and have the possibility to holiday abroad with ease. We want nicer things in our life, and investing in property is one way we can achieve all of this and not have to worry about working until we’re in our 70s or 80s.
So, if you’re in your early 20s and want to create a passive income for yourself or get on the property ladder as soon as possible then investing in property makes a strong move. Not only is property one of the safest investments available, but it is also relatively easy to understand and relate to, whilst everyone needs somewhere to live so there will always be a demand for property.
With property prices in cities such as Sydney constantly on the rise and outpacing wages growth, how can you invest in property as a young person? Here are all the answers you need to know.
9 Things you can do today to invest in property as a young person
1. Save, save, save In order to invest in property you typically require a 10% deposit, which means you need to start saving as soon as possible. It can take several years to save up a deposit and starting now is a must, especially with property prices constantly on the rise. This means that you need to make some short-term sacrifices in your life if you want to succeed, but that doesn’t mean you have to live like a hermit and never go out. Your 20s of course are for fun and enjoyment, but you can continue to have fun later in life if you get savvy today.
You firstly need to work out where you are spending your money and what costs you can cut down. Creating an ingoings and outgoings spreadsheet can help with this. If you live close to work then why not walk or cycle instead of catching public transport, or why not start bringing your own lunch into work instead of buying it every day. If you are serious about investing in property, then you might have to sacrifice that holiday this year too to get closer to your savings goal.
2. Get a second job One way to help speed up your savings is to get a second job and put this extra income straight into your property savings. Just think of it as a short-term sacrifice for a long-term gain as the earlier you enter the property market, the easier it will be to purchase property number two, three and four!
3. Reduce your bad debt As well as saving as much as you can, you also need to reduce any bad debt that you might have accumulated such as car loans. Having a lot of bad debt can make it harder to apply for a loan and can affect the amount you could borrow from a lender. You therefore need to concentrate on paying off all your bad debt as quickly as possible.
4. Keep a good credit record Alongside reducing your bad debt and saving, you should also keep a good credit record to allow banks and lenders to look more favourably on you. This means you need to pay off all your bills on time, every time to avoid getting a black mark against your name.
5. Stay at home for longer If it’s available to you, then another way to save money and cut your costs is to stay at home for longer rent-free. You might not want to still be living with your parents, but it will mean that you can save more money faster and get you to your investment property that much quicker. If you can’t live at home, then consider renting with a group of friends or with your partner, rather than renting solo.
6. Ask for help If you are unable to live at home with the parents you might find that they can help you in other ways such as gifting you some money or using part of the equity in their own home as part of your deposit. It’s always worth asking the question, as you never know they might surprise you.
7. Buy with someone else If you can’t rely on your parents for help, then you might want to consider buying with someone else like your partner, sibling or friend. It’s important to note that if you do intend to buy with someone else then you should get everything in writing and both be on the same page as to what your goals are and what happens if problems arise such as loss of rental income through no tenants. You want to buy with someone you can trust and don’t damage the relationship if things turn sour.
8. Get educated Whilst you continue to save, it’s important to get educated and learn as much as possible about the property market and the type of property you want to buy and where. Speak to a Mortgage Broker about how much you could potentially borrow to give you a rough idea on your savings target, whilst an iBuyNew Property Consultant will be able to assist you with any questions you have about buying a new property off the plan and how to structure your property portfolio to ensure you buy the best possible property first time round to help you secure investment property number two that much sooner. Our Property Consultants can also show you the latest facts and data about where is the best place to buy today.
9. Set strict habits Finally, in order to be a successful investor as a young person, you need to set yourself some strict habits and keep to them. This not only applies to saving a set amount each month, but also applies to keeping a strict mindset and staying focused on your end goal and being driven to reach your goal. If you aren’t focused and driven, then it’s unlikely you will reach property ownership.
Get in Touch Although investing in property as a young person might seem difficult, it isn’t as hard as you might think. As long as you are passionate and determined to meet your goals and get on the property ladder and set yourself a strict budget and keep to it, then this will help you invest in property sooner than you might think. You just need to be realistic with your expectations on what you can afford and take every opportunity that is thrown at you. You don’t need to be earning the big bucks to invest.
To learn more about investing in property as a young person, get in touch with our expert Property Consultants today. Call us on 1300 123 463.
Published on 13th of November 2017 by Marty Stanowich