Inspections, salespeople, activewear. Buying a home is not only a waste of a weekend but – pick the wrong place – and you could struggle the rest of your life.
A 2 million mortgage is not chump change.
However, speak to someone with a ~property portfolio~ and the way they talk it can start sounding like nothing. Worse: allow them to pressure you into buying before you’re ready (“rent money is dead money!”) that 2 million albatross could weigh you down the rest of your days.
Especially considering recent reports suggest investing in shares could be a better financial option than buying a house, you want to be savvy about when, where and why you purchase a property.
There are much better places to understand all that than here, however. What we’re here to talk about it today is one additional piece of advice every aspiring homeowner needs to hear (if not necessarily act on), on top of all that.
“Stop saving a big deposit, and stop looking in your local area.”
While you probably have a better understanding of the risks, environment and culture of your local area than other places (something the giver of the aforementioned advice arguably plays down), it’s also true that – if you live somewhere sought after – you probably can’t afford a property there.
Not easily at least.
Enter: Eddie Dilleeen, an ex housing commission resident who now owns 20 homes. Eddie recently spoke to News.com.au to give first home buyers a “brutal” reality check. Why? Because apparently, we have the wrong mindset.
“A 28-year-old with 20 homes, acquired while working as a bartender and fast food cashier, says first home buyers have the wrong approach.”
Eddie’s 20 properties are spread around Australia, six bought in the last year, and “all up his empire is worth about $5.5 million-$6 million,” News.com.au wrote.
“People think it isn’t possible (buying 20 properties) but it is. You have to stop saving a big deposit, and stop looking in your local area,” he told News.com.au.
Eddie reckons most inexperienced property buyers don’t capitalise on opportunities in the housing market because they only consider properties they wanted to live in, and only look close to where they live.
Most newbies also – Eddie says – cling to traditional methods of purchasing. Something he hopes you hearing his advice might change.
“You’re better off using a small deposit and paying lots of mortgage insurance so that you can get into the market quickly. It’s better than saving five years for a huge deposit because the growth in value will be faster than your ability to save,” he told News.com.au.
“Buying property should be about making money, not trying to save it.”
Further tips include:
- Buying in less popular areas, while continuing to rent where you want to live (“You can rent much better properties than you can buy. A Bondi rental could cost $700 a week, but will cost thousands a month to buy. If you rent, you can buy somewhere else and still get growth”)
- Checking out Brisbane for bargains (“It’s been held back since the global financial crisis so there are more opportunities for property to grow than in Sydney and Melbourne, which I think are plateauing”)
- Buy properties that rapidly grow in value
- Only purchase properties where the rent covers most, or all, of the mortgage costs
- Take emotion out of your purchasing
- Always buy existing properties that are undervalued, not new homes
- Make high rental returns a priority