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Investing In Your First Australian Home

Be Strategic About It

The Australian housing market has been interesting, especially in Brisbane where housing prices recently hit a record high. But it’s not excellent across the country; as it turns out, many capital cities have seen prices slipping; especially over the previous quarter. This is in some part due to increasing lending restrictions and plummeting levels of investment.

Here’s the truth: how well-protected your housing investment is will depend on the kind of investment you pursue. There are a number of different reasons to buy a house, and all will have their own advantages and disadvantages. Sometimes a low housing market can actually end up being more lucrative than one where prices are higher—it all depends on your strategy. You definitely need sound financial support through the process.

MyWealthSolutions.com.au provides sound advice on buying a house in Brisbane, even incorporating angles of approach some homebuyers may not have considered: “In Australia, purchasing a property to then rent out is a popular form of long-term investing. For most people investing in houses and/or units is easier to understand than types of investing such as bonds, shares, ETFs, or index funds.”

When you’re looking into any kind of long-term investment, you want to look at your entire financial situation before making any concrete decisions. Here’s the thing: even a relatively low income can produce marked profit over time. Following is a simple scenario that can result in continuing financial stability.

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Framing The Issue

Don’t think of your first home as one in which you’ll live the rest of your life. Think of it in terms of monthly income. How many people can you reasonably and comfortably fit in a house? If you can get five people into a house legally, charging them $700 a month, that’s $3,500 you’ll pull in from the property every month, which works out to $42,000 a year. In five years, that’s $210k. Pay it all to the mortgage and keep a day job, even with a low monthly income you can own that home very soon.

If you live in a basement room of this property, manage to find a house for $210k, and pay rent for five years with four other tenants, by the end of six years you own the property—the additional year is factored in for purposes of interest. Once you own the property free and clear, you can sell it and buy a better one to live in, or several small ones to rent out as it suits either you or your family.

When property values are low, the time is ripe for just this kind of buying. When they’re high, such a proposition can be more difficult. When a $210k property goes for $420k, the same plan outlined here could take ten years, and the property’s value will definitely decline during that time even if you’re diligent to regularly refurbish it.

Here’s the thing: you don’t have to live in such a property. Even if you’re just doing a traditional mortgage, you could purchase a home like this while you reside in a larger city, managing it from an apartment. If you find such a property in a smaller town, or the outback, you’re more likely to find larger properties that are less expensive.

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Don’t Be Daunted By A $550k Average Home Price

Conceivably, you can find a home for around $150k to $200k that’s large enough to fit five people. Now certainly, you’ve got to take into consideration that the average house in Australia is $550k; but that number doesn’t mean you can’t find less expensive housing.

Just 600km north of Adelaide, there’s a tiny community where the average home value is under $35k. Granted, the community only has 300+ people, and looks like something out of a Mad Max picture. But that’s the lowest of the low. If you search markets all across the country, you’re going to find quite a variety of pricing.

Budget a year to search and find the perfect property, including the time it takes to fix it up. Budget another year to get tenants you can trust in the property. Depending on the size of the property, it’s cost, the way you go about purchasing it, and your number of tenants, you could have a property in your ownership free and clear anywhere from five to ten years.

Once you have it, you sell it, and then you can make larger purchases. So be strategic, and look at housing—especially your first house—as more than just a living solution. Property is investment even those without great resources can afford.