Many Australians dream of owning their own home. But when is the right time? Many people choose to purchase a house after they have established strong careers, or to provide for growing families. Others are looking to invest in property during their 20s.
There is a rising trend among younger Aussies to invest in property, especially in their 20s. But is it wise to make such large financial investments at this stage? Honestly, there is no right or wrong time to purchase a house. Everybody is different.
So, should you buy your first home in your twenties?
Read more from the Leederville property management experts at Pro Property Group to find out.
Smarter spending
It can be frustrating to make monthly rent payments on an apartment that you will never own. This is motivating many Millennials to invest in their own home. You can save money by paying your mortgage payment instead of renting. In general, many homeowners are finding that homeownership leads to better financial habits.
Invest for your future
A house is likely to be the most valuable asset you own. But it’s much more than that. Real estate tends to increase in value over time. If you buy a house at an early age, you have something that is of immense value and can sell it when you are ready-probably for more than you paid. While property values are subject to market fluctuations, they will not decrease if you make a wise investment. You’ll likely be happy that you bought a home when you are older.
Improve your credit
If you are buying a house at an early age, it is likely that you have some credit. However, lenders will be impressed that you are able to buy a home. Even if your home is a modest starter home, getting a mortgage and repaying it on time will improve your credit score and make it easier for you to purchase a bigger home later.
Take advantage of the tax benefits
Many homeowners are surprised at the tax advantages associated with purchasing a home. First, mortgage interest can be deducted from your annual income tax. Second, homeowners receive tax credits that could lower their tax liability. Owning your home can mean that you may owe less tax to the government when it comes time for tax.
But at the end of the day-age is just a number. The right time to be a homeowner is when you are ready.
You could pay off your mortgage in your 50s
Australia’s house prices vary widely. But potentially if you are buying a home or investment property in Leederville in your 20s you can have a standard 25-year loan repaid by the age 55. This will allow you greater financial freedom as it is closer to retirement.
According to National Seniors Australia’s report, 62% of older people say retirement savings is their number one concern. Half of those quizzed answered “yes” when asked if they worry about their savings running out. Money worries can be common as you age. It is possible to have more retirement savings by buying a home while you are still in your 20s.
Real estate investment generates passive income
First and foremost, passive income will be generated by Leederville property investments that generate positive cash flow. Even though the return on just one property won’t be enough to make you quit your job, this extra income can help build an emergency fund, pay off student debts, create a retirement plan, or provide additional security in a volatile job market.
The challenges of being a young investor
That said, being a young real estate investor is not without its challenges. Before you get started on going this route, make sure you’re aware of the difficulties you might face along the way. To that end, we’ve listed some of them below for your consideration.
The initial cost of property investment is high
Real estate can be expensive upfront. It’s not enough to ensure you can afford your mortgage payment when buying a house. You should think about how you will finance your down payment and closing costs.
Although it is possible to obtain a residential mortgage loan with as little as 3% to 5% down, some mortgage companies will require investors to pay higher down payments. Your closing costs for the property could add up to another 2 to 5% to the purchase price.
Real estate is less liquid than other investments
Real estate is not as liquid as other investments like the stock market. You might be better off choosing another investment vehicle such as stock shares, mutual funds if you feel you will need to have quick access to your money.
Management of property in Leederville can be challenging
Being a landlord is not an easy job. You will be responsible for securing the necessary permits and rental agreements. Additionally, you will be responsible to market the property and screening tenants. Once you have a tenant, you will also need to manage the property’s maintenance for the duration of the lease.
Alternatively, you can hire a Pro Property agent to sort all of this out for you and keep your investment stress free. Pro Property Group is the leader in Perth property management. Why? Because we take care of all your residential and commercial properties, source suitable tenants and handle all requests.
You need only sit back and enjoy the return on your Leederville Property investment.
Talk to Perth real estate agency, Pro Property Group about the best Leederville property management solution for your buying, selling, or leasing needs.
Should you invest in property in Leederville?
It may not be everyone’s top priority to buy real estate in their twenties. While some people are more concerned with building a retirement fund, others prefer to increase their total income. For those who believe it’s the right path, property investing in Leederville and Perth suburbs early can make a big difference to financial independence.
At the end of the day-age is just a number, and the right time for you to invest in property is whenever suits you. When the time comes, contact our Perth real estate agency team at Pro Property we have the expertise to guide you through this journey and set you up for a fortuitous future.
