It’s a tough world out there for the younger generation when it comes to buying a property.
There are far too many column inches suggesting this cohort aren’t working hard enough to meet their ownership goals. The irony is that precious few of those articles deliver any practical advice to the younger generation about property investment.
Why? Because investment can be an effective pathway to homebuying.
Young purchasers want financial independence but all they hear about are cryptos and NFTs fed through influencer social posts… and that’s dangerous.
I see plenty of 30-to-45-year-olds who are curious and ambitious but have been given precious little assistance for setting out achievable property goals and applying a plan to reach them.
I understand the pain. I lived at home until I was in my mid-20 which is tough when you want to make your independent mark on the world. I now want to be the guide that’s been sorely lacking in this space.
The first step is getting past the psychological barriers which are stopping you from purchasing.
Here’s are four reasons I believe why being a lifetime renter is actually tougher than owning property.
We have reached a point in the price cycle where your personal wealth position will go backwards if you don’t invest in property and aim for home ownership.
Finding affordable rental properties has become increasingly difficult, particularly in and around capital cities. Vacancy rates have plummeted while rents have been skyrocketing.
A recent report by National Australia Bank revealed a huge range of suburbs where it’s cheaper to be a homeowner than a renter. Why wouldn’t you look to build your own nest egg rather than someone else’s under these circumstances?
Renting is a big impost on your household budget, yet as a homeowner or investor, taking advantage of historically low interest rates makes ownership a savvy financial decision.
You may have heard that property ownership is a form of enforced saving.
To a degree that’s true, but there’s an added advantage which is overlooked by this statement, and that’s the magic of leverage.
By owning property, you can leverage borrowing to help you build a portfolio which will grow in value. Put another way, if you have smart advice and apply strategies wisely, you can use the bank’s money (which remains relatively affordable at the moment) to invest in a way that builds your personal wealth. You don’t have to just rely on just your ability to ‘save’.
Best of all, applying those investment strategies will build a treasure chest of capital you can draw on to get into your own home sooner.
As a non-property owner, you miss out on being in control of your own destiny when it comes to shelter.
Landlords can move you on for a variety of reasons depending on which state or territory you live in. And even if you have the relative surety of living at home – which isn’t the best thing for an ambitious young Aussie – there’s still a chance parents will want to downsize or need to move at short notice.
Even if the first steps of your plan are to invest before buying a home, having a rental property gives you options. It has the potential to be your principal place of residence, even if it’s just for a short time.
Property ownership is also a great motivator for achieving more in life. It establishes goals around your future, and this often feeds through to other aspects of life. Time and again I’ve seen young investors improving their career prospects and personal achievement because real estate ownership gives them a taste for what planning and goal setting can do.
Drawing on professional guidance to assist in buying a property has become an easy process nowadays.
There are a range of professionals from mortgage brokers and accountants through to conveyancers and financial advisors.
But perhaps the most difficult and important relationship to establish is with a mentor who is well versed in the challenges you face as a young buyer.
I spend hours with younger buyers providing an education and answering as many questions as possible, so they get comfortable with their purchasing process.
Many have become despondent because they don’t know where to start. They don’t understand all the terminology like LMI, LVR, yield, negative gearing… whatever.
I explain that even though they’re earning a modest amount, a plan can still have them entering the market sooner than they imagine.
So, don’t try and do it on your own – learn from someone else’s mistakes. I’ve made plenty, but that can be to your advantage.
You might think property ownership is a rite of passage, but you need to act. No one is going to hand you the keys to your own home or investment on a whim.
Reach out so someone who knows what you’re going through and gain an education that lets you take advantage of all property ownership delivers.