written by: Himoneys team
When Australian think investment, many think property, particularly residential property. It is very expensive for young Australian to buy their first property. Buying your first home, particularly in Australia where housing markets have been ranked among the world’s most unaffordable. It might explain why the average age of Australian first-home buyers is closer to 40 than 20. Compared to a lot of fancy beautiful property, youth will begin some ugly duking and it will not big and fancy as mansion. But it will definitely first step to home ownership. Don’t worry and it will not the last home which youth will live in. But youth need begin somewhere reasonable and built up some equity.
Return from Property
Residential property and other investment return over 10 years to 2021.
These figure show that residential property is a good performer over time and it is around 15.6%
The best performing micro markets
In general, if you can afford unit and better go to buy unit instead of new apartment. Because the unit has some land content value. For long term, the land appreciate and the building depreciate it. Don’t mention that there has a lot of problems for new building high rise apartment.
- Old apartment with some aesthetically value.
- close to the city center or main shopping center in suburb. such as Box Hill and Doncaster, Glen Waverley. The suburb has train and bus and also has majority shopping center.
- Is closed to popular amenities, including public schools, shops, transportation and ,lifestyle facilities. Such as some very famous public school zone, the property seemed to keep good value. even unit is good for long term investment as youth investors,
- Is in an area where gentrification in underway or is likely to be soon, for example, I began to invest in property and Collingwood and Fitzroy are on the way to gentrification. Now, it become so expensive because the distance near city.
- Is aesthetically pleasing or at least has potential to be. Some old apartments in Toorak, Balwyn and Mont Albert, there had history value and the apartment is so spacious and good quality. For example, recently, we help old parents buy one 2 bedroom unit. It has 260 seq land. But the most amazing is layout and each bedroom has ensuite. The old unit has very decent back garden and two garages. There are not common for new 2 bedroom unit which has this type of layout.
- Has a unique or rare positive characteristic. Remember that scarcity adds value to my asset.
The cost of investing residential property
It is never for faint heart. But I guess that the feeling of security and comfortable can give youth a good purpose of saving and responsibility. There are a lot of ongoing costs when you own an investment property and I am going to look at some of those ongoing costs in today’s episode.
Council and water fee.
insurance fee.
land tax
body corporate fee
Property management fee to real estate agents.
maintenance fee.
bookkeeping fee
legal fee.
Ad fee to find the tenants.
bank charges.
petrol, phone and postage fee.
Outgoings
Buying cost
Mortgage fee
stamp duty on property
Stamp duty on mortgage.
buyers legal fee
Bank application fee
Survey fee
pest and building reports fee.
4 Tips for youth to buy the first home
For youth, it is some recommendation for four steps to saving early and begin early to buy the first home.
1, Save as young age as possible and invest in index fund as early as possible and while youth still works part time or study. You money still work hard for you and not just sit in the bank earn nearly 0 interests. When you are ready to buy, you can use it as deposit.
2, When youth save enough deposit and enter into the market as soon as possible and you can find some unit to begin with.
3, Use renovation and hold strategies to build equity.
4 Take advantage to live at home with parents and rent the place and renter can help you to pay off mortgage while youth can also add their own money to speed up the payment.