In the back of your mind you have often thought about buying property, but have heard so many myths about getting onto the property ladder that it stops you in your tracks.
I’m going to bust 10 of the most common myths I hear from my clients during my daily dealings as a professional buyers agent. These should give you the confidence and belief that you can and deserve to buy a home.
Yes, you can get on the property ladder
1. You need millions of dollars
If you aren’t a Rockefeller, don’t be discouraged! The amount of money you need to buy property is much less than what you think which makes it so accessible. There are three concepts which determine how much money you need to buy. These are how much you earn, what type of buyer you are and what lender your finance professional uses for your loan. The total amount of upfront cash you would need on a $500,000 property can range around $60,000-$120,000.
2. If I lose my job, I will lose my property
Clients often think they have to sell the instant something changes with their work circumstances. This is not true! In many cases if the property is an investment, it will likely cover majority of its expenses. If you occupy the property, then you can think about getting a tenant in during the time you have cashflow difficulties to help cover any shortfall you may have.
3. You need to be old and grey
I can assure you there are no questions about your hair colour when you purchase property! The successful property owner is often thought as someone who has spent a lifetime of saving and buying to get to a point of financial freedom. Everyone starts somewhere and these same people started one day with the goal of becoming successful.
4. You need heaps of time to research the market
It would be advisable to understand the local property market before purchasing. Single mums are busy ladies and a buyers agent can give you all your time back. A buyers agent can also ensure you buy the right property and pay the right price without having to use up all your valuable free time.
5. You need to be a property market expert
To truly understand a property market requires an understanding of real estate and what drives the local market. Never before has there been such expertise so readily available to help you plan for your home ownership.
6. You should only buy near the city
Where you buy is usually determined by your budget and goals. Someone who works in the city will have very different goals to someone who wants to make money and build wealth through property. There are literally thousands of property markets around Australia made up of regions, suburbs and streets. Each market will present various opportunities, particularly to the property investor.
7. You need to manage your own property
Definitely not true. A quality property manager will ensure you receive your rent paid on time and everything is managed correctly. It’s an invaluable service which will cost around 4-7% of the rent (depending on the state the property is in).
8. Tenants will destroy my property
Thankfully a good property manager should have screened your tenants. After that landlord insurance will protect you against property damage.
9. Investing is risky
Historically real estate has been a very safe asset class, meaning limited risk and stable performance. However, prices don’t always go up, they can trend sideways and they can fall. The brilliant thing about property investment is the security you have with tenants. In times of uncertainty with prices, you still have rent coming in to manage the repayments for long enough to get to those periods of strong growth.
10. Interest rates suddenly rise
Many clients think interest rate changes will force them to sell their property. In the majority of circumstances this isn’t the case. We currently have record low rates around Australia. Typically changes in rates are in relatively small 25 basis point increments. On a $500,000 this could equal about $1,250 extra a year.