In part one of how you can buy your first home even when it seems impossible, I identified that there is a growing problem in our thirty somethings which I think is cultivating a generation of working poor. Fast forward a couple of years and we have a cohort in their 50’s who have not built security that The Great Australian Dream (GAD) gives you.
The GAD is based on a very sound principle: forced saving. However when you look at the exorbitant rents these upwardly mobiles are paying, the only additional hardship is probably the sourcing of the deposit.
Getting onto the GAD bandwagon is the opportunity to make a decent chunk of tax free profit. So the name of the game is to get your first property and keep it for at least two decades. So I said I had three ways, here goes…
Hit up Mum and Dad.. it won’t cost them a thing!
Good old Mum and Dad have probably got stacks of equity in your old bedroom.
Either borrow a bit of equity to use for the deposit and buying costs of your property or ask them to go guarantor for the deposit.
This costs them nothing other than a few sleepless nights when you go through the “tossing it all in to flit off to live in an ashram” stage.
In most states, there is a stamp duty exemption for first home buyers grant which is a big saving.
Consider Lenders Mortgage Insurance (LMI) so that you can manage with a smaller deposit.
LMI is charged if the LVR is higher than 80. Nobody likes paying more than they have to but if it gets you into your own bit of paradise, why wouldn’t you?
As soon as you have enough equity, get the property revalued and give your parents back their piece of mind.
First Home Owners Grant.
If you have never owned a home before, you are eligible for The First Home Owners Grant. Some lenders will allow you to use this as your deposit. The catch is that it is only on new property.
New property usually equates to house and land or off the plan. These properties are usually overpriced because of the massive sales commissions $20,000 – $50,000. Find an agent who is willing to split the commission with you so you can add that to the FHOG.
Once again, Stamp duty exemption helps this strategy along.
If you are still a bit short, consider giving up those avo smashes (sorry couldn’t resist) for a while and you will have your deposit in no time!
If you can’t find an agent who is willing to share, we can hook you up with one of our rockstar agents.
Enlist The Power Of Partnership.
This is my personal favourite. The good thing about a job is that it gives you serviceability – the ability to get a loan.
If working full time, you are probably time poor. We’ll call you partner A.
Find a joint venture Partner B who fills the gap. Partner B has access to cash and time to do the project.
You partner up. Do the project together and split the profit.
In my world, there are more partner Bs than As because at this stage in life, we’re over the 9-5 thing and looking to spread our wings into more creative pursuits.
Our first JV netted our eldest daughter $100k and us $50k so not too shabby for a family project.
I love this strategy! We are doing it with each of our children and have numerous people in our programs rocking it.
Of course, like anything involving properties there are significant risks. And if you are considering going down this path, consider doing one of our free webinars on joint ventures.
I have named three ways to buy your first home without committing to a decade of instant coffee and goons.
Attack that mindset and get creative.
Once you start focusing on getting your own little piece of paradise and start taking actions, opportunities present themselves.
The world conspires to help you!!