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Planning to enter the property market - Some tips to help you dive and sail through

8Mo ago 0 Replies 213 Views
The Australian dream of entering the property market is not out of reach. Lets look at five options that could get you onto the property ladder sooner.

1. Rentvesting
The term ‘rentvesting’ is when you rent where you live and own an investment property which you rent out to someone else. Rentvesting allows investors to live where they want, enjoying the lifestyle of that location, with the owned property in a more affordable location. If you hold onto the property long enough, you may also benefit from capital growth and build up equity.
Rentvesting may mean you miss out on first homeowner government grants, but the benefits may outweigh the sacrifice. For example, if you negatively gear the property (when you pay more in property expenses than you receive in rental income) this allows you to use any losses to reduce your taxable income and improve your cash flow.

2. Rent to buy / rent to own
Rent to buy means you agree with the owner of a property to lease from them until you’ve built enough equity to get a home deposit to buy it.
A timeline and agreed purchase price are usually stipulated in a lease agreement generally over two to five years, with the view that the rent you’ve paid reducing the final sale price when you’re ready to buy. You’ll usually pay above market average rent and an ongoing fee for the option to purchase the property by the agreed date.

3. Buying land and renovating an older property
Another way to enter the property market is to invest in location. Purchasing land in a good position with an older style house, then renovating it may present an affordable option for you. It may also be a wise long-term investment if the land is expected to increase in value over time and you’re willing to hold onto it until that happens.

4. Buying Rural
Another affordable way to enter the property market is to buy in a rural location. The property and lifestyle expenses can be much cheaper compared to city living and depending on your qualifications and where you’re willing to relocate. Depending on the state, there may be government or council subsidies available, such as Victorian state governments teachers grant offering up to $50,000 for those relocating to rural and regional schools in Victoria.
5. Buying property interstate
The property market in one area will vary greatly from another. For this reason, many investors consider purchasing properties in other states. This can be a lucrative way to enter the property market. The key is to do your research, particularly if investing in an area you’re not familiar with.

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