appointment for a private viewing with an agent that day on a property
11
which had just been listed. After fighting for parking spaces and trying
to get information from agents already involved with other possible
buyers, the couple decided to leave the open inspections to concentrate
on the prearrangement appointment.
This couple has become astute buyers who had made some pretty
good decisions on property so far, who didn’t think with their hearts but
used a formula that had proven to be tried and true.
At the appointment they both knew immediately that this property
would be a good investment. Its only shortfall was its land content (to be
explained later), but it ticked the boxes for everything else. So they
decided to make an offer that was within their price range. After a little
negotiation, the price was accepted and the deal was done.
So, with long-term tenants in place and the value now exceeding their
original purchase price by $65,000 (in less than two months), this couple
are confident they have made another valuable investment decision.
It all sounds unbelievable, doesn’t it? In fact, I am writing this on the
day that we, my husband and I, went to the auction of the neighbouring
property. Yes, we are the couple and as much as we have done very well
in the property market, we still can’t believe that we have just made so
much money so quickly. Sure, the money is not in our hot little hands as
such, but it is there in equity which can be used to progress with other
investments. Access to those funds can be made available through
various means or taken through the sale of the sale of the property, but
either way they are funds to fall back on that we didn’t have six weeks
before.
So why did I tell you all this when all you want to do is to get into
your own house?
What I’m trying to illustrate to you is that If you play the waiting
game before making the move into home ownership, it could be costing
you more and more. While you’re waiting for the next tax return, to
finish paying off your car, or for the kids to start school, you could have
made tens of thousands of dollars and be living in a home that is yours.
The right time for buying into a home of your own is always now —
as long as you follow some simple rules and stay
disciplined.
There is only one WAITING GAME worth playing…
and that’s the one that you play when you’re in your own
home, and waiting for the equity to grow!
12
Introduction
With all the negatives being forecast about home ownership, you’d be
forgiven for thinking the prospect of buying your own home was not
only out of reach but not worth trying for.
Many people have now resolved themselves to the fact that they will
always be renting and so they may as well live it up, have a good
lifestyle and just keep on renting. This is the area, I believe, that is of the
most concern. If so many people think the attempt into their own home
ownership is futile, many won’t bother trying to make the transition and
in doing so prevent themselves from obtaining one of the most
significant assets for long-term security, and in my opinion one of the
best forms of investment for their future.
Now, I say my opinion, and some may not agree with my stand on
this.
Yes, there are other investments you can put your hard-earned money
into, but ask yourself this question. Will any of these investments ever
provide you or your family with the same sense of stability as that of
your own home?
What I am suggesting is that while times are indeed changing and
house pricing seems astronomical there may need to be a change in the
way we approach home ownership, rather than completely obliterating
the notion or destroying the hopes and dreams of the many people whose
life’s goal is to one day own their own home.
Instead of finding all the reasons why it can’t be achieved we need to
start looking at all the ways it can be. We need to start with
encouragement and support for the plan to get there and provide options,
possibilities and a plan of attack.
But before we get too excited there are some statistics that you need
to be aware of in order to put things in perspective.
There has been a steady decline in home ownership in the past 30
years for a number of reasons but the most important factor for you
relates to the anticipated ratio of home owners compared to those who
will rent within the next ten years.
For example: In 1978 I was in high school in Australia and at that
time over 73% of the population owned their own home.
Ten years later, in 1988, only 66% of the population were in the same
position and within five years that figure had dropped another 5%.
By 2010 it is predicted (and coming to fruition) that fewer than 50%
13
of the population will be in the position of home ownership with a ratio
of 60/40 by 2015.
These figures indicate that getting one’s own home has become
increasingly difficult over the past 30 years, which is in fact partly true. I
say partly true because as much as I dislike blaming anyone in particular,
I sincerely believe that there has and continues to be an inherent
fundamental flaw in our system that has contributed to the downward
spiral of home ownership.
During the past 30 years some major issues have impacted heavily on
our economy, including a recession, exorbitant interest rates, changes in
government, the stock-market crash, the collapse of high flying
entrepreneurs and so forth.
But during this time, did we learn anything of real value? More
importantly, have we ensured that the next generation learns from those
mistakes of the past and in doing so put the necessary educational tools
in place to prepare them for their own financial well-being?
I do not believe we have.
Right now, the economy for much of the Western world is thriving,
with employment at an all-time high, productivity never better and
prosperity flourishing. So why is it supposedly harder now to get into a
home than ever before?
If you put all that aside for a moment and consider what you were
taught in school about your own financial future, you might be like
many and come up with a big fat zero!
Now, consider what your parents may have taught you about buying
property, bearing in mind that 20, 30 or 40 years ago it was almost a
foregone conclusion that you would get married, buy a house and have
kids. Generally, you would probably learn as you go and hope to
goodness you got it right along the way.
If we were given any advice it was usually along the lines of “Make
sure you pay off the house and after 30 years it will be yours not the
bank’s”
Whoopee! Thirty years of my life paying off a mortgage and then
what will I have? Well, I’ll have a piece of paper saying it is mine and
lots of wrinkles to prove I earned it!
Surely th
ere has got to be more of a benefit than that? And do I really
have to wait 30 whole years?
14
Unfortunately, I didn’t get any education on finance at home and I
certainly didn’t get any at school. What I did learn was all through trial
and error, with error being the most common aspect of the whole
process. Boy, did I make some BLUNDERS!
15
But… what if?
What if I had been taught from a very early age about the property
market so that I was prepared when I needed to secure a home for my
family?
What if I was educated on how to pay off my mortgage quicker, use
that equity to duplicate and buy more property, how to create and
monitor long-term investments and to gain the financial skills necessary
for my future monetary independence.
What if?
I had been instructed in my formative years on how to be fiscally self-
sufficient, manage accounts, plan for my retirement and grasp the
fundamentals of health costs, taxes and insurances — how savvy would I
be when I became an adult? After all, I was always going to be an adult a
whole lot longer than I was going to be child, wasn’t I? So wouldn’t you
think that these skills might come in handy at some stage?
If only…
Alas, this didn’t happen for me and it more than likely didn’t happen
for you. Instead, I had to suffer, endure hardship and drag my children
through adversity, all because I had not been educated on such things
and no one deemed it necessary to teach me. I had to go earnestly
searching, become reprogrammed in my thinking and then adjust to
more sacrificing in the pursuit of some security.
But is that struggle really necessary?
I now know that it isn’t.
The pathway into getting one’s own house need not be as harrowing
as all that, even in times when home ownership seems to be getting more
and more out of reach. In fact, it can be far easier than you think if you
get educated on how to do it from the outset.
16
If You Never Get the Breaks
You’ve Gotta Make Your Own!
Research suggests that many people are looking for ways to get into
their own home but not necessarily getting the right information from
the outset. They may go to financial advisers, banks, mortgage lenders or
a friend for advice and while this is one sure way of getting help about
accessing loans, finding out the pitfalls and getting an understanding of
how the real estate market works, it doesn’t always mean that those
people giving you advice know all there is to know in an ever-changing
market, or that they have your best interests at heart.
What if you’re knocked back by a couple of lenders and told that you
don’t have the ability to borrow for a home? What then? Many people
just give up the prospect of ever owning their own home or put the idea
on hold until something triggers a need to try again.
Clearly, the system in place as we have come to know it involves you
making the first move into property ownership and unless you fully
understand how to go about it, you are likely to stumble along cap in
hand in the hope that the loan is approved by the financial institution.
And if it is, you’ll be content with the outcome regardless. In the event
of a refusal for a loan, the reaction can be worse. Often it has a negative,
sometimes lifelong, effect on how that person approaches getting a home
loan the next time, if at all.
This is where we need to have a re-think.
Given that this is probably one of the biggest financial commitments
a person is likely to make throughout their lives, it might make good
sense to have some knowledge of where to go, what to look out for and
who to ask. At present our current system relies on the assumption that
most people will just know what to do. Unfortunately, there is very little
education, if any, in place that gives some clear guidelines to follow or a
plan of attack and response when trying to get into your first home.
If you’re someone who has experienced many, many years of
temporary, transient accommodation, who has never been shown how to
get into a home of your own by role models who could guide you
through the process, much less plant the seed that it is possible to
achieve, your chances of getting into home ownership might seem much
less likely. It’s like trying to be aware of something that you have never
ever been exposed to.
Equally, a limited amount of information, much less encouragement,
17
is available to people who haven’t quite found the right pathway and
don’t know where to go for help.
When we’re having trouble with the things we aspire to achieve there
are usually options available to us that will help us towards our goal. For
example: getting a higher education, learning to drive or working our
way into the career of our choice. The assistance towards that goal may
include enrolling in a technical college to lift our qualifications,
repetitive practising with a variety of instructors when learning to drive,
or taking a course at night to further improve our skills in a profession.
Even our personal computers have a troubleshooting system which can
help us out of a problematic area.
So why then don’t we have practice runs, learning directories,
facilities for teaching and support to turn to when we want to embark on
such a life-changing event as buying our own home? And it is life-
changing because you become totally responsible for everything
involving that property for the first time in your life and its for a very
long time. Decisions must be made, from the colour of the curtains to the
type and cover of insurance you’ll need. This, combined with the
pressure of mortgage re-payments, rates and other expenses you’ve
never had to consider previously, makes it a whole new ball game and
it’s one you don’t want to lose.
I don’t have the answer as to why this deficit in education exists but it
is one that I will continue to campaign for as it is in dire need of
addressing, I sincerely hope it will be recognised and implemented into
the school curriculum sooner rather than later.
What about our children?
There is no doubt that our children’s future into home-ownership is
rapidly diminishing, which is all the more reason why our generation,
who can see the writing on the wall, have an obligation to do something
about it. Each and every one of us can play a role in tutoring our children
on the importance of becoming financially independent and how to go
about securing a home, but education must also come from the schooling
system so that children will have on-going coaching about their
responsibilities and can be helped into reaching a fundamental
requirement of life.
It is a vital necessity of life, a life skill that must be taught, reiterated
and updated at regular intervals. It is knowledge that needs to start
making its way into children’s lives in the formative years, so that the
&n
bsp; economy and the welfare of future generations is sustainable and much
18
more promising.
I am personally passionate about this, and believe that parents do
have the power to move the education systems towards accomplishing
this goal. I would urge you to take the time to petition, attend meetings,
talk to other parents and write to MPs. This is your children’s future
after all and that future could have a significantly better outcome with
your help now.
Through this book I hope to inspire, encourage and deliver
knowledge on ways of getting you into your own address. I will argue
that you can buy into your first property even when others are telling
you that you can’t. That as much as the cost factor for purchasing is a
major contribution, it is more the structure of how you do it that counts. I
am going to reveal my own personal stories and demonstrate ways and
means of getting a home others haven’t considered and show you that in
order to achieve this goal, you have to look further afield, change your
approach and fight against those indoctrinated beliefs we may have
adopted from our elders. That’s not to say that what our parents and
grandparents did in the past is completely passe, because it isn’t, in fact I
would advocate that we need to revisit some (not all) of the older, more
basic ways, which have fallen out of use, if we are going to make some
real headway in owning our own home. What does need to change, and
significantly, is the way we look at getting into a home and how to use it
to its best potential.
You need to be aware from the start there is a number of options
available that can assist you into home ownership, but all require
research and a great deal of consideration on your part in order to secure
the best possible accessibility for your personal circumstances. Making
that first jump into buying a property is exciting, at times stressful and
often nerve-wracking. It takes time, focus and a word I use repeatedly:
‘discipline’, but I guarantee it is worth every short-term ache for the
unprecedented long-term pleasure it can bring.
The way to solve that problem is simple. Throw yourself into being
knowledge empowered, boots and all. Get exposed to the real estate and
the housing market by reading, asking questions, visiting display homes,