For the first time property investor getting started can be frustrating as “you need money to make money”
Once you get started on your first investment property, many people subsequently build up a large property investment portfolio and retire debt free owning several investment properties which protect their real wealth from the effects of inflation.
To get started you need either a cash deposit of usually 10% or equity in a block of land/house etc (equity being the $ difference in what the property is worth and what you owe the bank).
Because we are human we have “limited means and unlimited wants”. In other words no matter how much we earn it is never enough. To overcome the problem of saving you need the discipline of a forced savings regime. Open a special saver account and have the maximum you can afford deducted by your pay office and credited straight to the savings account. You then need the will power to not withdraw any money until you have reached your goal. For example if you were looking to buy a residential property for $500,000 you would need $50,000 for your deposit plus a further $18,000 for stamp duty Legal’s, mortgage insurance etc. i.e. a total of say $70 000. By saving $500 per week, you will reach your goal in 2.75 years.
Many young people get started with the help of their parents/friends who are willing to allow the borrower to use equity in their residential property.
Should for example your parents be willing to assist in this manner, it is important to realize that not only are they putting their property at risk should you default, but they are also acting as your guarantor. I always recommend in this situation that they seek independent legal advice.
To demonstrate to your parents, yourself and your banker that you are worthy of this support, I recommend that you conducted a savings regime with a target of say $25,000. At $500 per week you can achieve this in less than one year.
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