Starting a property portfolio as a young person is a challenge, but not an unbeatable one. If you’re a young person hoping to buy an investment property or if you’re helping someone plan their first step on the ladder, here are our hints.
Make a plan
Decide why you want to invest. What are your long term goals? What would you like to achieve in the next five years? Why? These questions help form your strategy. Speak to a professional if you don’t have clear goals or a solid financial strategy. Doing this well will help you when you need to make decisions now and later on.
Make sure you can afford it
Pull your budget together. Make sure you have money for a healthy deposit, fees, and contingency. Figure out how much rent you would need to bring in to cover expenses and make the risk of investing worthwhile.
Increase your chances of getting finance
It helps to know what lenders are looking for:
- Enough income to cover loan repayments and living expenses
- Solid employment history
- Stable residential history
- Good savings history
- Reducing debt (for example, pay off the credit cards and personal loans), increasing income (take a second job) reducing expenses (cut the power bill, move in with family, take a cheaper phone and TV plan) and building a savings history all help.
Think about co-investing
You could consider asking your parents, siblings, or friends if they want to invest with you. This means splitting the investment money, splitting the risk and splitting the profits. It can be a really good way to speed up your entry onto the investment property ladder.