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  • Writer's pictureCameron Bird Property Group

Advice for First-Time Property Investors and Their Parents

Updated: May 22



  • In short: Selecting the right investment property is vital for financial stability and lifestyle satisfaction. Focus on areas with consistent demand-supply imbalances, study past growth trends, and invest in land value to reap long-term benefits.

  • Key Takeaways: Parents can assist by encouraging and educating their children about responsible borrowing and investing. There are a few ways for parents to help fund the entry to investment.


Overview

Buying your first investment property is a significant decision with long-lasting impacts. Opting for the right property can substantially increase your financial prospects. Yet, a misstep in selection could mean enduring financial strain and lifestyle compromises. Parents, drawing from their own experiences and education, can help to share invaluable insights to guide their children towards wise investment decisions.


This blog will provide essential advice to first-time investors and their parents.


How Parents Can Help

Encouraging your child to buy a property is important, but they need to be motivated. Once they're interested, teach them about borrowing responsibly, managing money well, and saving for a mortgage.


  • Family Guarantee for Deposit: Offering a family guarantee to the bank for the deposit amount over an existing mortgage, can guarantee the loan will be repaid. A finance mortgage broker or your bank can help with this structure.

  • Cash Gift for Deposit: A cash gift can help them with the deposit. Remember, giving a cash gift can have tax consequences so make sure you review this before engaging in this strategy.

  • Co-owning Property: Co-owning property with your child/children can be another option. However, we recommend always receiving professional advice, as it might have tax implications.


Choosing Wisely Is Vital

When it comes to selecting an investment property, lifestyle preferences often overshadow financial considerations.


Essentially, it comes down to three critical factors:

  1. Identifying areas with consistent supply-demand imbalances;

  2. Analysing historical growth patterns, and;

  3. Allocating a significant portion of your budget to land value.


First-time investors should maintain a sense of realism. Securing a property in their ideal location may not always be feasible initially. Instead, they may need to compromise and invest in a property that meets macro and micro-investment fundamentals and offers strong growth prospects.


The aim is to invest in an initial property that experiences substantial capital growth within the first 5 to 10 years of ownership. This accumulated equity can then be leveraged for further investments or upgrades.


Lean on Government Support

Several state and territory governments offer incentives, like providing stamp duty concessions, to encourage investors and homeowners to construct new homes. This aims to address housing shortages and high rent situations. However, not all regions in Australia offer these incentives, so it's crucial to carefully consider available incentives when making investment decisions.


Contact us directly to discover your possibilities and next steps. Book a call here.


The Next Steps
  1. First, figure out how much the first-time investor can borrow.

  2. Then, combine this with any savings to set a budget for the property purchase.

  3. Once you have a budget, decide where it's best to invest for the highest return in the next 5-10 years.

  4. It's wise to consult a trusted property investment specialist for professional advice throughout this process.



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