First and foremost, investing in real estate is a long-term venture. When contemplating to invest in property, you must be certain you are able to afford holding the property over the long term (a minimum of five years) due to the general nature of real estate being an appreciating asset. In general, capital growth in property only comes with time and you must have the cash flow to support and maintain the expenses of your investment property.
Buying your own home is usually the first big investment many people make in their lifetime. However, your first investment in property need not be your home. Many young people are now choosing to make small investments in property while staying with parents. It is the hope that these small investments will eventually fund the purchase of their dream home.
The most basic step in considering your first property is to ascertain your budget, that is, how much do I have to put down as a deposit (usually 10% of the purchase price of the property if you are successful in securing a home loan) and the associated costs such as stamp duty, legal fees and initial outgoings. I would allow for an additional 5 -10% of the purchase price, depending on the type of property for these additional acquisition costs.
Saving up spare cash and getting financial help from parents are among the most common ways towards a deposit although first home buyers are now using new ways to find that first deposit such as sharing with siblings and friends.
For more strategies on how to buy your first home, visit our First Home Buyers section.