‘Your first property is always the most important, because this first property is your stepping stone and can literally set you up for a financially secure future,’ says Chris Christofi, founder and CEO of Reventon in a recent interview for Your Investment Property Magazine.
Our advice for first home buyers
If you’re in your twenties or thirties and looking to buy your first home, you’ve no doubt been saving hard for a deposit, looking for mortgage deals, and dreaming of a space to finally call your own.
Everyone wants their first property to be their dream home. But making your first home purchase is also an important financial decision that can have a lasting effect, so it pays to do your research and think strategically.
If you’ve got your purchase funding in place and you’re ready to search for properties, follow these useful steps to make sure you’re making the right first home buying decision.
1. Buy your home in the right area
Keep an open mind when considering which area to buy your first home in. Think outside the box and don’t just look close to where you currently live. By taking the time to explore new areas, you can find locations where your money will work the hardest for you.
Look out for suburbs where there is upcoming investment in transport or amenities. We call these “high growth areas”. You can also look at past local property prices and rental trends to check how your investment may grow over the next few years.
Download a free suburb property report now and gain insights into your area of choice. The more research you do when you buy your first home, the more likely you’ll be to make a smart buying decision.
2. Consider ‘rentvesting’
Many people have been renting for years in an area they know and love, yet they can’t afford to buy there. Instead of buying and moving to a new suburb where there is cheaper property, but less amenities or is further from your work or friends, consider becoming a rentvestor instead.
Rentvesting is where you use your home deposit and home loan funding to purchase an investment property in a growth suburb, and rent it out to tenants. You stay in the suburb you love, while your investment grows. After a few years you may be able to release equity from your investment property to fund a home purchase in your local suburb.
It’s a smart way to get on the property ladder, start making investments, and see your money grow, without having to compromise on your lifestyle.
3. Don’t max out your home loan funding
The bank will often tell you how much you could borrow, not how much you should borrow. Over-borrowing happen when people max out their borrowing capacity without considering what they can actually afford to pay in mortgage costs.
This can lead to problems later down the line. If your mortgage payments go up or your circumstances change, you need to know that you can afford it.
Consider getting advice from a property expert to talk through your finances and determine what the best borrowing levels are for you. Reventon offers free financial advice sessions for first home buyers to help them get on the ladder with confidence. Contact us to book a free financial advice session, with no obligations to take up any of our services.
4. Do your property market research
When it comes to buying property, you can never have too much information. Make sure you’ve done your research into the local area and property sale prices to ensure you’re paying a fair market price for your first home.
You don’t want to spend too much on a property because you’ve fallen in love with it, only to find that it exceeds the ceiling price for the local area. You should also take steps to make sure the construction of your property is sound, or it may lead to expensive problems later.
We often advise first home buyers to look at purchasing an off-the-plan home. This will come with a builder’s warranty and in most cases you can save on stamp duty and reduced power bills. You may even be eligible for a First Home Owners Grant.
5. Find a property hot spot
Homes and properties that are close to amenities in the local area such as schools, transports, shops, and parks are not only more convenient for you, but more attractive for future buyers or renters when you decide to move on. These factors tend to help property values increase over time at a faster rate than other homes.
Look up your area’s Walk Score – this is how walkable the area is, and whether most errands can be accomplished on foot. Consider how easily you can walk from your potential new home to the main amenities when you view properties.
Buy your first home with confidence
‘If you’ve been smart when purchasing your first property, having looked at all your options and sought expert advice, in three to four years’ time the property should increase substantially in value,’ Christofi says.
‘You could then get your property revalued and use your equity, or a percentage of the property that you own, as a deposit for a second property, kick-starting your investment portfolio’.
To find out more about how to buy your first home, book a free property consultation with one of Reventon’s experts and get personalised insights to suit your situation.