On the path to home ownership, saving a deposit is arguably the biggest hurdle, but what happens next?
Fiona Conley, a RAMS Home Loan Specialist from Willetton/Canning Vale in Perth, and Taku Ekanayake, a 29-year-old “rent-vester” from Sydney, explain exactly what first-time buyers should do after securing a deposit.
Taku says working out what kind of buyer you are – an investor or traditional owner/occupier – is the first step.
Rent-vesting can be a way to have the best of both worlds when it comes to buying a house. Picture: realestate.com.au/buy
Narrow the property search
After planning to buy a home in Sydney to live in, Taku chose “rent-vesting” – buying an investment property in a cheaper location and renting a home elsewhere to live in. He now owns six tenanted properties and lives “where he wants” in a rental.
“I was very committed to getting onto the property ladder and after researching for hours online and reading books, I came across the idea of buying an investment property, rather than a home first,” he says. “The numbers were more appealing to my position in life.”
Next comes research. “The next step was about understanding what type of property would best fit,” Taku says.
“I had to learn to understand the numbers behind the numbers. So, not just about how much deposit I needed, but also understand holding costs, mortgage repayments, interest only versus principal and interest repayments, rental yield and cashflow analysis,” he says.
“Once I educated myself on these numbers, I was clearer on what type of property to look for,” he says.
Once you’ve decided on your priorities when it comes to where you want to live, you can choose the best option on where you want to own. Picture: realstate.com.au/buy
Seek sage advice
Fiona says talking to a home loan specialist at the beginning of your property search is wise. “We can explain the pros and cons of the different options and government assistance available to first home buyers, whether that’s with a house and land package, an established property or becoming an investor,” she says.
An expert will also explain the financial side, Fiona adds. “It’s not just about how much you can potentially borrow, it’s about what should you borrow to still be able to maintain a good level of living; a realistic figure,” she says.
WATCH: How to do your property homework…
Armed with knowledge, the real search can begin. Like all millennials, Taku went online in the first instance.
“A lot of my upfront research was done online and then by picking up the phone and calling agents, to try get access to upcoming properties (not yet on the market),” he says.
Living in Sydney and looking to buy interstate where property was more affordable, Taku didn’t have the luxury of attending open houses.
Buying interstate means doing most of your property research online. Picture: Getty
Inspect properties with an eagle eye
“After months of research, I did go up to the specific area in Brisbane I had set my sights on, to do some ‘on the ground’ research. On my first trip, I put in an offer on a property and I was successful.
“However, I would not have had the confidence to put in an offer on the spot if I hadn’t done my months of desktop research prior to making the trip,” Taku says.
When looking to put in an offer, knowledge is power, Fiona says, which is where property profile reports come in.
“Our property profile reports provide in-depth information about the actual property you’re looking at buying, with things like how much it previously sold for, expected growth in the suburb, demographics and comparable properties.
“It also explains how much it should sell for, which is very important for first home buyers to understand,” she says.
Living close to friends and family can be priceless. Picture: Getty
Negotiating on price is an art, but can be learned, according to Taku. “I took the time to learn to negotiate myself. I called a lot of agents to get a feel for how to communicate effectively with agents,” he says.
“I read plenty of sales, persuasion and negotiating books too. Some great ones are The Art of the Deal, Sell or be Sold and The 10 Times Rule.”
When it comes to finding professionals like conveyancers at the end of the buying process, personal referrals are often the best, Fiona and Taku agree.
Information in this material is general and does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. You should also obtain independent professional advice relevant to your financial circumstances.
This article was originally published on
7 May 2018 at 6:17pm
but has been regularly updated to keep the information current.