Investing in rental properties is often put off as something you should do later in life, when you’re more wealthy, experienced and grounded. While there is nothing wrong with this viewpoint, it is completely false.
Entering the investment property market while you’ve still got a full head of hair is not only possible, but also beneficial.
You shouldn’t let the lack of a six-figure salary or experience in the market hold you back, as provided you’re prepared to put the hard yards in, starting your own portfolio is a genuine opportunity. However, as to be expected, it’s not without its challenges.
You should always remember that your first property investment is just the beginning of your property ladder and portfolio. Here are a few tips to help you start your property investment career while you’re still young, before you have to start plucking the grey hairs.
The Commission for Financial Capability recommends one way of decreasing your cost of living is to pore through your bank statements and determine your weekly running expenses. Is there any way that you can reduce the spending? Perhaps change your ritual triple-shot trim latte to a delicious mug of instant and consider packing your lunch instead of buying out everyday.
Ironically, your biggest expense is likely to be the rent your landlord demands every week. While the thought of enduring your parents’ unrelenting nagging every day may put you off, moving back in with your folks can help accelerate your savings and your dreams of one day being the one who benefits from weekly rent payments! Of course, there is the added benefit of your mum’s cooking, too.
If you have any kind of debt racked up, now is the time to settle it. This can include car loans, personal loans or even credit cards. Worst-case scenario, you could end up with a negative credit rating, which is one way to ensure the meeting with your mortgage broker or lender concludes very quickly with a “denied” stamp.
The savings that you’ve already accumulated from residing at your parents’ house will certainly help to resolve any debts and bills you might have.
On top of ensuring you have a sufficient amount of money put aside, lenders will also analyse your recent bank statements to ensure you are a consistent saver. Therefore, every week you should put a set amount aside into an account you can’t easily access (for those times of weakness when the latte is calling).
While it does involve sacrifice, property investment still presents an opportunity for anyone, regardless of your age. There’s an added benefit, too – who doesn’t like homemade cooking!
Reference: Ray White Group 2016