Australians looking to get onto the property ladder but lack the financial resources to do so are being encouraged to get creative and use other means at their disposal.
During a recent episode of The Smart Property Investment Show, real estate agent and property investor Alex Lumsden explained how he got onto the property ladder while making just $5.10 an hour.
“I hear a lot of people saying that they can’t get into property, they can’t afford to get into property, and I was definitely in the same boat,” Mr Lumsden said.
“I came up, let’s not get into it, but a standard story, came up growing up without much money, saw a lot of people make a lot of money out of property, and I thought that’s definitely what I want.”
However, the property investor was not able to enter the market by himself, requiring the help of family members before buying his first property in Sydney’s inner west.
“I bought into our family home, and I bought another property with some family. Why? I guess I always thought that it was the way to make money,” he said.
“When I left school, I was a mechanic. I started my apprenticeship on $5.10 an hour. I was doing the calculations the other day. That was about $193 a week before tax, without overtime. And so, I guess, for me it was the only option. There was no way I was going to be able to afford a whole property by myself, and so that was the only option.”
Mr Lumsden explained that he has now changed property strategies, with the property doubling every 10 years no longer being applicable.
“I feel like over the last few years we’ve seen a change in that typical ‘it’s a 10-year property cycle’ idea, and you’ll buy, and then 10 years later it’ll double in price. That was always the advice that I got from the older generation. And over the last three years, we’ve seen a drop, a spike, and then a drop again in three years. I feel like we don’t have that 10-year cycle so much anymore,” Mr Lumsden said.
Due to this, the property investor has started focusing on regional areas over the capital cities.
“I look a lot in regional areas because there’s a lot less fluctuations in price. If I had to pick one, I would choose cash flow over capital gains. Obviously, both are great, but if I had to choose one gun to my head, I’d choose cash flow. So, we have a bit of a strategy right now where we buy regional properties and we’ll either hold them for the cash flow,” he said.