Why the right time to buy is always when you can afford to
With property prices rocketing up, many Aussies are struggling to determine when they should invest. But according to ou...
First home buyers should take advantage of various government schemes and become property investors, an industry expert has advised.
Custodian’s acquisition manager and property investor, Alex Fitzgerald, believes the government is offering first home buyers “free money” which they should take advantage of.
“The financial incentives on offer at the moment for first-time buyers are huge,” Ms Fitzgerald said.
“In some states, when you pool the state government and federal government concessions together and take into account the reduced stamp duty, you can access up to $45,000 or $50,000.
“No one is ever going to hand you that sum of money again, you’d be crazy not to jump in now and take advantage of it. You’ll essentially have $50,000 equity in your home from day one,” she explained.
While pointing to the drawback of having to live in the property for 12 months, Ms Fitzgerald said it was a small price to pay for investors.
“In most states, you only need to live in that house for 12 months to be eligible for those grants. I know a year seems like a long time for some people, but we are talking about an investment that is going to be a key stepping stone to your future.
“It’s a free kick, all of these grants, so why not use them, take the free kick. No matter which way you cut it, it is free money. It is unbelievable to get you into your first home.”
Ms Fitzgerald advised first home buyers that can afford to get onto the market that now is a good time, with historically low rates making it in most cases cheaper to buy than rent.
In order to maximise return, Ms Fitzgerald said investors should be focusing on buying land.
“Land is what increases in value, so this is the most important part of your purchase. Prioritise your land component; ideally it would be 40 per cent or more of your purchase price. Most people start by picking their house, whereas that is exactly the opposite of what they should be doing.
“You should be steered by what you can afford, but consider the lifestyle aspects, too. Is it close to transport, amenity and schools?”
“Once you have the land, you know how much you can afford to spend on building your house.”
Ms Fitzgerald also reminded first home buyers not to get swept up in chasing their dream property from the start.
“It’s not realistic to chase your perfect dream home as your first house,” Ms Fitzgerald said.
“Build what you can afford. As we get older, our incomes increase and our equity increases, then we have access to more money to add onto or extend the house to suit our changing needs,” she concluded.