We may romanticise the image of what it was like to buy a house 30 years ago. Everyone seemed to just be picking houses off the pavement, but that isn’t quite the reality. Buying your first home has always meant considerable sacrifice, patience, fortitude and organisational skills, regardless of the state of the market.
We asked a number of Australians, who have been in the property game long enough to know what works and what doesn’t, about what they wish they had known when they were buying their first home, and the advice they would give to Australians buying their first home.
Rob Flux has a great story for budding property owners. He had to start from scratch twice in the accumulation of wealth through property, and now retired from property investing, he runs the Developer Network, a community of over 4000 Australians, in which he provides insights into the use of property as a means for wealth management and accumulation.
“I purchased my first property at the age of eighteen, and my first investment property at the age of 21. I bought my first home off my parents while I was living in Darwin, while my investment property was onsold within 18 months for approx 40% growth on the initial purchase. I purchased these just prior to ‘the recession that we had to have’, where I was paying interest rates in excess of 18%.”
At 38, Rob faced financial stresses that almost effectively brought him back to the start again, forcing him to evaluate how he could use property to his advantage and do so in a way that was active, rather than passive.
“I’ve now learned how to manufacture growth, rather than rely on the market, picking areas with better capital growth capabilities and finding ways to control property rather than own it, using this control to force value onto the property prior to purchase.
“I wish I had known the implications of negative gearing and its limits in enabling me to scale my investment portfolio quickly as well as compounding growth and why you want to keep as many properties as you possibly can. It’s important to understand ‘growth corridors’ and how they can massively increase the chances of capital growth”
Founder of Pure Finance, Brendan Dixon, is someone to have on your side when looking to purchase your first home. For Brendan, mindset is everything for first home buyers.
“Be realistic about your property expectations,” says Brendan, “And be prepared to compromise on some little things, otherwise you may never buy anything.”
Beyond that, preparation and organisational know-how is everything.
“Know your monthly living expenses. Do a budget for everything, including coffee, Netflix, holidays etc. and see how much you have leftover to be used as a loan repayment. A loan should suit your individual lifestyle rather than your lifestyle having to suit a home loan.”
There are always regrets in property. Could we have gotten the house for cheaper? Did we not push hard enough on our first choice before losing it to a stronger bidder? Alan Yeung, a property consultant at Location Property Group, has is own regrets, but has some sage advice for keeping some perspective amid the flurry of buying a house.
“I wish I could have purchased sooner. The earlier you start your search then the earlier you can get a result, but only look within the price range you can afford so you can save a bit of time in your search.
“My general tip for a first home seeker, especially with high loan to income ratios in Australia is: know that it is the same for the neighbour who is also purchasing today. Whilst the income and loan ratio was lower 15-20 years ago, the interest rate was also much higher. There is nothing to be scared about. Embrace the challenge.”
Want to know more? Check out some of the hidden costs of buying a home so you don’t get caught out, and check out our post on the pros and cons of rentvesting to be aware of your options when buying a home for the first time.