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

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

    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.


    View more blogs and videos for first home buyers

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    Originally published on flatmates.com.au

     

    About the author

    • Raymond

      Raymond A Ram is the RAMbassador for RAMS Financial Group. Raymond works with the RAMS team to bring simple, helpful and expert information on home loans and savings accounts to life with his down to earth and cheeky personality. He enjoys seeing everyday Australians turn their dreams of saving for a goal or getting into a home a reality. 

      Growing up in Goulburn, NSW, Raymond was brought up with good old-fashioned Aussie values of hard work and a fair go. It soon became apparent that Raymond wasn't content for the conventional path of grazing, producing the very best wool, and finding a nice sheep to settle down with. So it wasn't long before his passion for performing and his talent as a likeable larrikin shone through - landing him a few roles such as 'RAMlet'. He was even tipped to play RAM-bo at one point but chose to become star of the small screen instead as RAMbassador for RAMS. He now finds this role so much more rewarding.

      Contact your local RAMS Home Loan Centre about your home loan options.

      Raymond A Ram
     

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  • Disclaimer:

    The information here is of a general nature only and is not intended to constitute financial or tax advice. You should consult your professional adviser, accountant or taxation expert for advice specific to your personal circumstances.

    The views and opinions expressed in this article are those of the author alone and do not necessarily represent the views or opinions of RAMS Financial Group Pty Ltd ABN 30 105 207 538 (RAMS),  Westpac Banking Corporation ABN 33 007 457 141 (Westpac) or their related bodies corporate. This article is strictly for information purposes only and neither RAMS, Westpac nor any of their related bodies corporate make any representation as to the accuracy or completeness of the information in this article or endorse the views expressed in it.