Ever wondered how to enter the property market with a low deposit or a low income? Here are some tips on how you can get started in property investing right now:
Join forces with friends or relatives.
This option will boost attractiveness for banks. For example, a young person living at home earning $45,000 a year with savings of $30,000 is not an attractive client for banks. But if you can get three people with combined incomes of $135,000 and provide a deposit of $90,000, it’s a totally different story.
If you choose this option, you must have a written agreement in place, and you must split the loan along ownership lines. For example, if you buy a new townhouse and your loan is $360,000 including buying costs, each of the three buyers can have a loan split of $120,000. One may pay interest only, one might make principal and interest payments and one could make large extra payments. When the property is sold — per the sale date in the agreement — your net proceeds will vary depending on your loan balance at the time of sale.
Family pledge loans
Essentially if you have a family member with equity in their home, they can let you use that equity as a deposit to buy your first home or investment. You will need to show the bank some savings history but you can borrow 100% of the cost of buying the property. (email our office and we will send you the chapter from The Formula to Successful Property Investing book that covers this).
Our MD Michael Sloan is an investment property specialist, call us on 0417 577 500 or email: info.richmond@bhgre.com.au to organise an appointment.
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