How young people can tap into the property market?

Thanks Corey. That's very inspirational.

Bayview - that Frankston unit seems a good start for the youngster.

I have just had a look on the fhog. Correct me if I am wrong. If they buy this as an investment, they are still able to have their grant when they want to buy their PPOR (if it still exists at the time).
 
Another side benefit here is that if they buy something they can add value to (renovate etc), they can use the equity gain from this to purchase their next purchase (IP or PPOR).

Get them to have a chat with a savvy broker who can give them an idea of their lending capacity and a basic strategy to show the path they can potentially use moving forward.

They might only want one place, or 10. But so long as they have the option to do either, all the more power to them. :)
 
Im a full time uni student and bought my first IP last year.

I could only get 80% LVR and needed good rental yield to make it work.
 
Im a full time uni student and bought my first IP last year.

I could only get 80% LVR and needed good rental yield to make it work.
When you say;"I could only get 80% LVR"....and "good rental yield to make it work"....

This is how it mostly always was. Very few loans other than P&I even 15 years ago.

Then, over a number of years, all the newer more exotic loans came to be, higher LVR's and LMI, etc.

We became spoilt.

Then, the GFC occurred, and the Banks mostly went back to the way it used to be again.

So, don't feel too hardly done by.
 
Really not that much to it to be honest. I started saving for my first house when I was 16, worked nights while at uni. Paid deposit, acquired house. :)

To be fair though, it's a *lot* more difficult to save for a deposit and service a loan for a FHBer in the eastern States with the large median variance compared to SA - but there's nothing stopping your friend for purchasing regional/interstate.

The flipside is that the properties he would qualify for would most likely be neutral to slightly positively geared, minimising the impact on his low income.

Why were you at uni as a 16 yr old?

How much was the first buy?
 
My understanding is: correct.

Wish I'd bought something like that in Frankston! Good find.

Yep - I bought 3 investments then got the FHOG when I bought my place. :D thanks John.

For the OP read this thread about getting started, its inspirational. Save or print it and give it to the young people in your life who are feeling daunted.

I grew up at uni watching the last Sydney boom and can remember the sense of hopelessness at the time.

Guess what? It didn't last forever.

And other markets proved affordable and profitable.

Where there is a will....
 
I'll chip in.

I bought my first IP at age 19 (in 2006). My salary at the time was $27,000 from memory. I got a 1 bedroom unit in regional NSW for $81,500. I had saved about 15k all up. The place is probably worth $90k now (lol), in other words its made me no money whatsoever. BUT - its been worth its weight in gold in experience and simply getting my foot in the market. So, congrats on your friend for wanting to start out young, I highly recommend it.

Advice wise, its the classic thing - start small. Cant go wrong. Forget Melbourne CBD. Tell him to make that his 3rd or 4th property (if he's so inclined). I had 2 IP's before I applied for the FHOG, so that's not an issue.

Starting small has so many benefits - you learn the process, if you stuff it up it wont matter so much, and just to get your feet wet. Its much easier to go from 1 property to 4 properties than it is to go from 0 properties to 1.

Key things to do
- read a bunch on personal finance and how to live frugally. Absolutely vital for anyone saving. Its not how much money you earn, its how much you keep. It doesnt mean you cant have fun, it just means you drink before you go out, instead of buying $14 vodka red bulls at the nightclub...etc
- make sure the property is positively geared or very close to it. If its not, you're completely shooting yourself in the foot and making it impossible to buy more until you're on a significantly bigger salary.
- set goals (finance, property specific)
- do/attempt renos yourself. Stuff it up. Fix mistakes. Learn.
- down the track a bit so doesn't apply right now - but buy a PPOR and rent out the other rooms. Its cheaper week to week to buy a 4bed and rent out 3 rooms than it is to buy a 2bed and rent out 1 other room, even if the outlay is significantly higher.
- a bunch of other stuff, but those are all i can think of at the minute.

Good luck :)
 
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Funny that everyone states..save more..spend less...buy cheaper (read a dump)..set your sights lower..I could do it 10, 20 or 30 years ago so why can't the younger set now do it...

Statistically first home buyers are at record lows. Something has changed in the last decade or so...so just telling young people to work harder, longer, get three jobs, move out to the boondocks, live at home till your 30, don't have kids till your 40, make sure your partner is capable of working and never stop just doesn't cut it. Sure if you adopt these measures you can break into the market. I mean lets face it...who wouldn't LOVE to live with their parents into their 30's, travel 2-3 hours each way to get to work daily, get married and defer having children only to never see your grand children grow up, work 60 to 80 hours a week for the next decade all the while squirreling every spare cent away. I can see why the younger set are lining up as first home buyers....NOT

The question is why should young people HAVE to undertake these measures when the boomer generation before them did NOT. It's TOO HARD!!! Look at the rates of first home buyers and tell me its not.

I think most people would love to be in a position to be paying off their own home, practically it is becoming impossible for the young masses to make this transition due to the reasons above. If you have done it , congratulations. In an earlier time you did it, the world has changed. The rules have changed, what worked for you 10, 20 or 30 years ago does not work now. The FHB's know this even if you don't.
 
Funny that everyone states..save more..spend less...buy cheaper (read a dump)..set your sights lower..I could do it 10, 20 or 30 years ago so why can't the younger set now do it...

Statistically first home buyers are at record lows. Something has changed in the last decade or so...so just telling young people to work harder, longer, get three jobs, move out to the boondocks, live at home till your 30, don't have kids till your 40, make sure your partner is capable of working and never stop just doesn't cut it. Sure if you adopt these measures you can break into the market. I mean lets face it...who wouldn't LOVE to live with their parents into their 30's, travel 2-3 hours each way to get to work daily, get married and defer having children only to never see your grand children grow up, work 60 to 80 hours a week for the next decade all the while squirreling every spare cent away. I can see why the younger set are lining up as first home buyers....NOT

The question is why should young people HAVE to undertake these measures when the boomer generation before them did NOT. It's TOO HARD!!! Look at the rates of first home buyers and tell me its not.

I think most people would love to be in a position to be paying off their own home, practically it is becoming impossible for the young masses to make this transition due to the reasons above. If you have done it , congratulations. In an earlier time you did it, the world has changed. The rules have changed, what worked for you 10, 20 or 30 years ago does not work now. The FHB's know this even if you don't.

Get a grip! This sounds like the rant of a GenY who wants the world, but isn't prepared to do what it takes to get it.

It has ALWAYS been hard to get the first home. Yes, the world HAS changed, but it's not made home ownership any harder. For instance:

Then:
Must have genuine savings of 20%. Max LVR 80%
Nearly impossible for a single woman to purchase
Consumer goods a lot more expensive
17.5% Interest rates

Now:
Don't need savings, 95% loans commonplace.
No discrimination
Consumer goods cheap as chips in comparison to wages
Sub 5% Interest rates

Of course, there's more, but there's a start.

Many of the older crowd (including me) bought dumps, in lousy places, just to get a foothold. What makes you so special that you need a nice place. We bought secondhand furniture too, because we couldn't afford to buy nice new stuff.

The difference is that many of the young people I meet are so consumer driven that they don't know how to save. They spend more than they earn, and then cry poor.

The baby boomers, on the otherhand, learnt to live within their means and save for what they wanted. We often did without because we didn't have the money to buy something. We learnt what is a need, and what is a want.

Here you are, crying that it's near impossible for the young masses to buy something, when right in front of you, you have examples of plenty of young people that have not only bought one property, but multiples, (CJay, nhg, rohan22no, MattADL). If they can do it, others can too.

Oh, & judging from the responses of these youngsters, they weren't on high incomes at the time either.
 
What these guys have in common is they work smarter, brilliant.:)

CJay, nhg, rohan22no, MattADL - lower median and good cashflow


A side issue - at the time had you ever considered asking your parents to help you with deposits (a short term loan) if they were in a position to do this????


Cheers
MTR:)
 
Get a grip! This sounds like the rant of a GenY who wants the world, but isn't prepared to do what it takes to get it.

It has ALWAYS been hard to get the first home. Yes, the world HAS changed, but it's not made home ownership any harder. For instance:

Then:
Must have genuine savings of 20%. Max LVR 80%
Nearly impossible for a single woman to purchase
Consumer goods a lot more expensive
17.5% Interest rates

Now:
Don't need savings, 95% loans commonplace.
No discrimination
Consumer goods cheap as chips in comparison to wages
Sub 5% Interest rates

Of course, there's more, but there's a start.

Many of the older crowd (including me) bought dumps, in lousy places, just to get a foothold. What makes you so special that you need a nice place. We bought secondhand furniture too, because we couldn't afford to buy nice new stuff.

The difference is that many of the young people I meet are so consumer driven that they don't know how to save. They spend more than they earn, and then cry poor.

The baby boomers, on the otherhand, learnt to live within their means and save for what they wanted. We often did without because we didn't have the money to buy something. We learnt what is a need, and what is a want.

Here you are, crying that it's near impossible for the young masses to buy something, when right in front of you, you have examples of plenty of young people that have not only bought one property, but multiples, (CJay, nhg, rohan22no, MattADL). If they can do it, others can too.

Oh, & judging from the responses of these youngsters, they weren't on high incomes at the time either.

Good points skater

The other example I always give and works is, if you are talking to a youngster or even early 30s, I always ask, 'do you know what the median in the state is?'

Followed by, 'then what gives you the impression/entitlement that you can/should be able to afford at or above the median when its your first house????'

If first home buyers are buying at or above the median, who on earth is going to be buying below the median.
Always works but always screwed up and unhappy faces when reality hits them
 
What these guys have in common is they work smarter, brilliant.:)

CJay, nhg, rohan22no, MattADL - lower median and good cashflow
Yep, I've got a lot of respect for those that just get in there & DO it.


A side issue - at the time had you ever considered asking your parents to help you with deposits (a short term loan) if they were in a position to do this????


Cheers
MTR:)

Not sure if this comment was for me or not, as you appear to be younger than me, but older than the quoted members above.

When I was young, the banks didn't accept loans for a deposit. It had to be genuine savings (and you had to prove it).

Of course, now they'll accept just about anything.
 
Funny that everyone states..save more..spend less...buy cheaper (read a dump)..set your sights lower..I could do it 10, 20 or 30 years ago so why can't the younger set now do it...
Because the goal posts have shifted.

Everyone wants to start off with a 4x3 DLUG, or a trendy pad in the CBD, or Elwood etc.

Noone wants to move out to Sunbury and similar type areas, and live in an older fibro or weatherboard joint with no curtains or carpets, and not close to any shops, cafes or schools, etc...like our parents and their parents usually had to do.

Well; actually - there are some that do, and they get on with that without any whining.

The ones who whine are the ones who want the lot and are not happy to have to compromise or sacrifice..
 
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