Looking to buy a property or sell to upgrade your home in 2019? Read on.
We’ve ripped open the prezzies, clinked glasses, and devoured our merry way into the new year.
With the festive season now behind us, many of us Aussies are gearing up for a stellar 2019 with grand visions. To get fitter, eat better, quit smoking or drinking, to travel more, and…
buy an investment property or sell to upgrade to a bigger home.
If you find that saving for a deposit seems out of reach, you’re not alone. Temptation for more immediate fulfilment leads many Aussies to divert property funds elsewhere…
So how can you tackle your biggest property resolutions before your hard earned deposit falls by the wayside?
Here’s a quick guide for saving to buy a property and selling to upgrade your home.
Watch the How to tackle 2 big property resolutions video for a quick overview, or keep reading…
Property resolution: Saving to purchase an investment property
1. Take command of your equity
If you own a home it may be possible to use equity to buy property instead of savings. Equity is the amount you actually own of that property (property value less what you owe). An experienced property investor once said to me:
“If you don’t utilise your equity it is like having a cheque sitting in your kitchen drawer that you don’t put in the bank. It is your money and you should have it working for you.”
2. Team up to fast track
Saving can take a long time, especially with the amount of deposit that is needed these days. Look at other possible options that can help you get on the property ladder more quickly. This may mean a joint venture or short-term help from family who already have equity.
If you go down this road make sure it is clearly documented on your arrangement as this may save potential issues down the road.
3. Do your due diligence
Work out what is affordable for you and build in buffers to those calculations. You may not be able to afford in the suburb you live so look at other areas within your price range that are showing good signs for growth.
In saying that don’t just buy in an area because it is affordable as more often than not these will be slow growth and you may face tenant issues associated with the demographic. Do your research.
Property resolution: Selling to upgrade to a bigger home
1. Expect and plan for change
Interest rates have been very low for quite a while now and it is not uncommon for people to become apathetic. The reality is that interest rates can’t go much lower and it is only a matter of time before they start to rise.
Don’t fall into the trap of thinking ‘we can afford that bigger house in that better suburb’ if nothing else has changed in your circumstances except low-interest rates. Do your calculations based on interest rates being 4% or 5% higher than what you are paying.
2. Get your reinforcements ready
Build a strong reserve of assets, which is a good way to absorb interest rate hikes. For example, if you have a well-diversified investment property portfolio, you can find ways to use those assets so you are not forced into having to sell your home. So it may be best to start building the asset base before looking to upgrade the family home.
3. Protect your new asset
Strongly consider getting Title Insurance when you purchase your next property, particularly if:
- You are unsure that an addition that has been made to the property (such as a pergola or ‘lean-to’ room) has been approved by council
- If the boundaries of the title are unclear.
These can be expensive to correct if you have to, and aren’t protected.
The most important part of bringing your property goals to life..
We are what we repeatedly do. Excellence, then, is not an act, but a habit. — Aristotle
Resolutions are made or broken during the first 3 months of the new year. How can you give yourself the best opportunity to make your goal happen?
Well, studies on habit formation found there are 3 main parts to forming a habit. Running through each of these steps will be crucial to achieving your property goals:
1/ Initiation phase: Figure out your intention
2/ Learning phase: Decide on what action you want to make into a habit. Set and repeat.
3/ Stability phase: No conscious effort is needed to consistently keep up the habit.
Your habit could be as simple as:
- Including 15 minutes every evening to learn about potential investment areas outside where you live
- Putting aside a % of every pay to build your buffer for interest rate hikes
- Listing 1 activity you are looking forward to doing when you’re financially independent
In summary: A guide to tackling your new year’s resolutions in 2019
If your goal is to buy a new investment property:
- Use the equity in your home
- Team up with others who have equity
- Work out what’s affordable (including outside your area)
If your goal is to sell to upgrade to a bigger home:
- Expect and plan for interest rate hikes
- Build your asset portfolio
- Get title insurance to protect your assets
And finally, create long-lasting habits that will move you toward your property goals every day – and it will become reality.
I hope this has given you some useful ideas you can action within the crucial first three months of the year.
Feel free to contact me if you have any questions about anything mentioned in this post. If you need a hand to create a tailored property investment plan. Or if you’d just like to say g’day. I’d love to hear from you.
Learn more: Download your free E-Book
Learn how to invest the right way with your free E-Book Property Investment: 10 Essential Considerations.