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A young property investor has outlined his journey and some of the lessons he learnt for other first-time property owners.
During a recent episode of The Smart Property Investment Show, first-time property buyer Caleb Gray revealed some of the key findings from his first purchase.
With property being a staple of the local economy, first home buyers can qualify for a raft of benefits pending where they are buying, which, Mr Gray highlights, first-time owners should keep an eye out for.
“The First Home Loan Deposit Scheme, which came out earlier this year, I was just before that. I basically just used the first home buyer concession, which they had in Queensland.”
“So no stamp duty or land transfer tax. So that definitely helps. That’s pretty big. It’s pretty good time to be a first home buyer. There’s definitely lots of helping hands from the government at the moment, but that’s all I got to utilise,” Mr Gray noted.
For many would-be property investors, saving the 20 per cent deposit can be a daunting task, with Mr Gray explaining how investors can get into the market with less.
“It was just principal and interest, basically, because I was putting in, I think, I was only a 5 per cent deposit, so beggars can’t be choosers. It wasn’t too much to go around, but they’re definitely happy to lend to you at 5 per cent deposit,” he said.
He explained that in return for a lower deposit, lenders expected him to purchase lender’s mortgage insurance (LMI), which he was happy to pay in return for entering the market.
“I think that’s what a lot of people think about, like, ‘Oh, I’ve got to pay this large chunk of LMI, for no reason’. But the way I see it is you’re getting in. I mean, it’s quite minor when compared to the property,” Mr Gray said.
The property investor explained how he was able to leverage relationships to not only keep costs down but add equity to his home.
“I think most people can relate, they know someone who knows someone who’s a tradie and who can do the work. So I think that’s probably a big thing if you’re doing renovations and looking to capitalise on that. If you know someone and they can do you a good deal, and you know they do good work, and if you can pay them cash, all the better I think,” he said.
He also explained the importance of allowing additional money in the budget for unexpected repairs.
“I probably budgeted myself [$10,000], knowing that it would blow out and it did a little bit. So, I’m glad that I just allowed that buffer for little things along the way, like the water leakage,” Mr Gray explained.
Finally, the young property investor explained the importance of knowing what you want, the location you’re buying in and negotiating the best deal.
“I bought it for 333. And at the time, I could not find anything that was under 350, that was off the highway,” he said.
“So, I think I did pretty well, I reckon it was easily 340. So 333 for it, at the moment. I’ve put a bit of work into it now, along with some friends. I’m definitely not good on the tools myself, I’m terrible. I reckon I’ve put in about $15,000.
“Conservatively, I think it would come in around 400, at least,” Mr Gray concluded.