One of the first things that many people think about when they want to buy a property is the best ways to save for a deposit. Unless you have existing equity or are getting help from family or friends it can be difficult to save a 10 or 20% deposit for the majority of properties on the market today. However, with a few easy changes to your lifestyle you might find that your dream investment property is closer than you think!
Creating A Budget
One of the best property investment tips is to create a budget, however the idea of counting every dollar that you and your family spends can be off putting, especially when you are working hard and want to enjoy the finer things in life. You’ve maybe had your eye on a new car for a while, or thinking of taking that European holiday, and having a budget would probably put an end to these ideas, at least for the near future. The thing you have to remember about buying an investment property is that it is a matter of priorities – to get want you want now (a secure financial future) you may have to sacrifice a few little luxuries or experiences.
Saving for a deposit for an investment property may mean that you cook at home on weekends instead of eating out for a few months, putting off buying that new car for a year or two, and saving money on holidays by choosing cheaper options. Creating a budget doesn’t have to be difficult or time-consuming either, with many great low cost financial software packages available that can help you set financial goals and track your progress over time.
Review Your Investment Options: Consider off The Plan Properties
One option that experts suggest is their number one property investment tip is to look at buying an off the plan property rather than looking at existing developments. There are many benefits to off the plan, including stamp duty or transfer duty exemptions, pre-negotiated deals and the chance that the property will gain in capital value once it has been finished.
Most off the plan properties only require a 10% or 20% deposit, and some developers may even consider deposit bonds in lieu of a deposit altogether. Deposit bonds are a form of “insurance policy” in which the insurer guarantees that they will pay the full deposit in the event that the deposit would be forfeited by the vendor. No money exchanges hands, however the full purchase price is required to be paid at the time of settlement once the property is completed. This means that the purchaser will have time to get their finances in order whilst the property is being built and be ready at settlement time[i]. Deposit bonds can be complicated and there are different types on the market as well as rules governing their use, and you should contact your bank or other lender to find out more information.