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Here’s how your first property could be your forever home

You’re meant to get married, buy a house, have kids and spend the next 30 years as a slave to a mortgage.  Well, that’s just not cutting it for switched-on millennials.

Here’s how your first property could be your forever home

04 June 2018

Sticking to the old-school life script, you’re meant to get married, buy a house, have kids and spend the next 30 years as a slave to a mortgage.

Well, that’s just not cutting it for switched-on millennials, who are increasingly changing the narrative and buying their first property with a different plan in mind.

This generation of buyers has embraced “rent-vesting” – buying a property as an investment in one spot and renting a home elsewhere – to help them build a portfolio, so they can afford their dream home one day.

Taku Ekanayake, a 29-year-old finance broker from Sydney, is a case-in-point.

After setting out to buy a “home to live in” in Sydney, he switched track to rent-vesting and now owns six tenanted properties, living “where he wants” in rented accommodation.

Heres how your first property could be your forever home - friends in backyard

Millennials are embracing “rent-vesting” – buying a property as an investment in one spot and renting a home elsewhere. Picture: Getty

When it became apparent it would be impossible for him to buy in a location he wanted, Taku put his thinking cap on.

“I was very committed to getting onto the property ladder and after researching for hours’ online and reading books, I came across the idea of buying an investment property, rather than a home first,” he says.

“The numbers were more appealing to my position in life. I could have the rent cover most, if not all, of my mortgage repayments and expenses and I was able to carry what is deemed as ‘good debt’, which is income-generating debt and tax-deductible investment debt.

“I quickly decided to change my strategy and looked interstate, where I was able to afford, not have to change my lifestyle and also still rent in Sydney,” Taku says.

His first property, a “nice home in a good outer suburban area of Brisbane, where a lot of blue collar families live”, started it all.

“I purchased my first home with not a view to live in now or in the long-term, but more a view that the property would outperform other properties from a rental income and capital growth perspective,” Taku says.

Five other houses on “good-sized blocks of land” in the “middle and outer rings of capital cities” followed.

;“I rent a unit in Camperdown in Sydney and half of every month Air BnB-ing a place right near the beach on the Gold Coast. When my lease is up in Camperdown this year, I will be moving to a different suburb of Sydney I have never lived in.

“My views may change once I settle down and have a family, however I love the idea and lifestyle ‘rent-vesting’ enables me to have right now,” Taku says.

He says young people should be smart about how they enter the market.

Heres how your first property could be your forever home - house

The first home might not be your dream home. Picture: realestate.com.au/buy

“I’d encourage anyone looking at purchasing a property to do the numbers on both buying an investment property versus a home – and really do the numbers, purely from a financial point of view.

“The first home you buy is not going to be your dream home, for most anyway. So, why get so attached to the idea of buying a home first?

“I would prefer to buy as many investment properties as possible and eventually, when I’m in a position to do so, then buy that dream home. It’s just a matter of having a mindset shift and challenging the social norm,” Taku says.

Heres how your first property could be your forever home - man eating food

The flexibility and lifestyle of ‘rent-vesting’ is appealing to more and more. Picture: Getty

Neil Harlock, a RAMS Home Loan Specialist from Canberra, says young Australians are increasingly becoming savvier about property.

“Young people are looking to establish a property portfolio that can help set them up for the future,” he says.

“We often see customers who have purchased land and constructed a new dwelling, they then have sold for a gain and then completed this two or three times over. This has then set them up for an owner/occupied purchase and most times, contributing a larger deposit,” Neil says.

The key to success is planning, he says. “We are able to access information that provides historical data based on suburbs or postcodes that buyers might like to buy in. This helps with the education process for the buyer.

“We also provide education around deposit and saving requirements, as lending criteria can be different between owner/occupied loans and investment loan types. We want to ensure that the loan they end up having is the right loan for their current situation,” Neil says.

Originally published on flatmates.com.au

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