I grew up in Sydney Australia the city of sun, beaches and great weather. I took these for granted until I moved to grey cold London. But alas it was home where I first discovered I liked monopoly. In board game form and reality.
I bought my first house with my ex-BF. I had no savings as I had been travelling the world and volunteering in Africa. He had a lot though. The house was $380k in a suburb called Auburn. It’s not a nice beach suburb but rather it was filled with ethnics and the occasional soap bombs at the train station. I’m an ethnic too so I’m allowed to say this (ha ha). We took out an 80% loan and paid a 20% deposit. Well he did and it took me over a year to pay him back my share. We also spent just over 10k for the renovations. The house was a mess but we weren’t going to live in it so…whatever!
So basically in the summer of 2010, I owned a property after a few months of hard work searching, buying, financing and renovations and I owed $38k to my then BF.
Obviously not everyone has a BF to help with a down payment of $38k. So clearly we need to address the way to help you do this.
The first step to to not walk away from that number. The number seems large but let’s break it down.
Firstly you don’t have to take a 80% loan. You can take 90%. The additional 10% would equal to about extra $150/month in repayments. Very manageable. So you’d still need $38k for a 10% deposit.
An average salary in Australia is $55k approximately but if you’re a millennial like me and went to university and have a job I would say you should be at least on $65k – $100k if you have a professional job.
Let work on the lower end and say you earn $70k. After tax your take home pay would be around $2500. If you already live at home then I suspect you already have the deposit in savings. If not you probably have a shit load of life experience – drugs sex rock and roll. If you don’t live at home then after rental and expenses you really don’t have much room to save $38k.
Here is where you would normally give up. But imagine you hadn’t? Imagine you went and asked 7 family members for a $5k loan each? Imagine you paired up with siblings to buy this house? Imagine you phoned your overseas uncles for help? Imagine you sold the idea to your best friend to buy together? The options are endless. Think about when you were young and just wanted a tamagotchi or the newest yo-yo. Yeahh gen Y you know that’s you. Those brain yo-yos were the shit. Did you negotiate with the rents? Did you offer to do more chores? Surely you didn’t just take no for an answer?
It’s about how much you want it. I also didn’t have this 38k but what did I do to get it to pay back the ex BF? I did the following:
- Asos wasn’t popular yet in Australia. I bought nice dresses on sale and using discount codes and sold them 3x the price on eBay Australia.
- Cheap chinese fashion sites were also not very popular so again I did the above.
- I had a $66k salary but minus super and “benefits” it really was $57k. Just an average Jane here. But I sent him 500–1000/month anyway. Some months my car insurance came in or whatnot but I consistently did (1) and (2) everyday.
After a year I was debt free to the then BF and we had a house that paid itself off consistently. Said house in 2015 has now doubled in value and I’ve now bought out the ex-BF’s share thereby increasing the cost base but I also increased the rent since 5 years ago and it’s still paying itself off! No effort for a house?! SURE ILL HAVE ONE!
Now you’ll say (1) and (2) were doable back in 2010 now it’s not! Well that’s true but as new things come in, we just need to adapt and learn. It’s a dog eat dog world innit. It wasn’t like I was a lucky dog pouncing on a rare opportunity. In 2010 you could find many properties for that price in the suburbs of Sydney. And just like 2010, 2016 will have similar but different opportunities. We just have to look!
I started with a past tale as an example but I hope to share more of the present. More things we can do NOW.
Here is a numerical representation of all costs in detail :) it’s not IMPOSSIBLE!
Let’s end with a summary of 3 possible actions to take to get your first house!
- Analyse your life for “hustle” opportunities: friends, parents, siblings, best friends — anyone want to buy together? What are you good at? Can you make saleable things? Can you provide services for a fee? Can we reorganise your budget so that you can save extra $300/month. I can help you — send me a msg!
- Figure out what you’d like to learn to invest in. Equity? Property? High interest savings? There’s no one size fits all. I may write about property but that’s because I like it. What do you like? If you like it, you’d more likely learn it properly and thus, invest your money more effectively.
- Make a plan/checklist/goal — be specific e.g. Own 2 properties by 2018, have a portfolio of x amount value by 2018. Make them S.M.A.R.T. Then list down steps to achieve them. Write down where everything can go wrong and plans to overcome these issues.
These 3 steps could even take you a year — don’t be impatient but don’t lose momentum either. KEEP CRACKING, READING, SEARCHING, AND PLANNING!
W
