It’s no secret that housing affordability is making it hard for Australians to buy a home. Whether you’re looking to buying your first home or investment property, thinking outside the box can often lead to some more creative and successful ways to buy a home.
1. Fractional investing
The relatively new concept of fractional investing is becoming a popular option. Fractional investing allows investors to get their foot into the market without owning a complete property or paying for any of the costs that come with property ownership.
An easy way to understand fractional investing is to relate it to owning shares. The property is purchased and maintained by a fund manager, who then splits the property into shares that are often called ‘bricks’.
Each property is divided into about 10,000 bricks that investors can own for as little as $50 each. As the value of the property increases, so does the value of each brick.
Fractional investing provides two ways for investors to increase their financial return. The first and most common way is to sell their brick once its value has increased.
If they have a longer-term approach, they can wait until the fund manager decides to sell the property and receive their share of the sale.
2. Rentvesting
Requiring a head over heart approach, rentvesting is a way for first time buyers to get onto the property ladder without giving up their lifestyle.
Popular suburbs often have higher property prices that are out of a first home buyer’s budget. When someone continues to rent in their preferred location while owning an investment property somewhere more affordable, they are rentvesting.
For rentvesting to be the strategic steppingstone you need, you must research the property through the eyes of an experienced investor. Make sure that it’s in an area of likely capital growth, has potential for high rental returns and is low maintenance.
3. House and land packages
For a more consolidated option, house and land packages can be a good choice for your first home. Often built within or close to main metro areas, house and land packages are offered through organisations at a flat fee.
To make it easier for first home buyers, some organisations offer discounted deals on their house and land packages for different designs. Early bird deals are also available, offering the buyer to lock the property in with a 5 per cent deposit to get them started, with no more to pay until the house is completely built.
Do your research
The bottom line of finding a property you can afford, is to do your research. Property prices and availability vary across locations and knowing where to buy can help you land your first home sooner.
Property prices aren’t constant, so keeping up to date with the market is key for any first home buyer. The ideal situation is to buy in an area that has an affordable median house price and a high capital growth rate.
Some of the most affordable suburbs close to major cities include:
- Elizabeth Downs, South Australia
- Melton, Victoria
- Two Rocks, Western Australia
- Huonville, Tasmania
- Blacktown, New South Wales
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