How to build your property portfolio. Step 1 – Zero to Hero
There are two simple steps to building your portfolio from scratch. They are: raising a deposit and accumulating investment properties. Let’s discuss the first step:
Step 1. Raise a deposit
The very first thing you need to do to get started on building your portfolio is to raise a deposit. There are many clever ways to get a deposit.
Option 1: Get a deployment
If you’re in Defence, get a deployment on operations (ideally), exercise or courses. Volunteer for everything, particularly while you’re young and don’t have a family and kids to worry about. When you’re deployed, even if it’s on a course, you can save a lot of money since you’re being accommodated, fed and kept busy so you’re not able to spend all your money.
Option 2: DVA compensation pay out
This is often a very easy goal to achieve. You can do this outside of Defence and the chain of command.
Simply go to your local RSL and talk to an advocate who can advise you on what you’re able to claim. There are lots of small things you can claim. Things like injuries you’ve incurred on the job but are not stopping you from being deployable.
Option 3: Get family help
Your family can help you in three different ways: gift, loan or family guarantee. If they are able, your family could give you the cash as a gift for a deposit. Alternatively, they can loan you the cash which you would pay back later. Now, they may not have the cash per se, but they could have equity in their own home from which they can borrow. Your parents would be able to go to the bank and take a $50,000 loan against their mortgage as a second loan. You would then make the repayments for the additional loan.
Lastly, you have the family guarantee where you basically borrow 105% of the property value from the bank, where 100% is for the property and 5% is for the costs (stamp duty, legal fees, etc.) In this instance, the loan is worth more than the property and the bank is not happy about it so they want a guarantee from someone else, like mum and dad or your rich uncle, who will take responsibility for the loan repayments should you not be able to honour them for any reason. You’ll then wait for the house to go up in value until it exceeds the value of the loan and go back to the bank and have them release the family guarantee since the property will be secured on its own value now. If you think you can’t afford a property right now, maybe you can with some family help.
Option 4: FHO Grants
You can make use of the First Home Owner’s Grant
Option 5: Save, save, save!
While you can’t save your way to wealth, you can save your way to your first deposit. You only need to save enough for a deposit on your first property, thereafter you just keep leveraging from one property to the next to build your portfolio.
Are you ready for Step 2? Be sure to join us next time!
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