Getting into the property market and buying a house can feel like a marathon of a challenge for any single parent.
Here are 5 tips that can help you get to the finish line.
1. Buy a Property in a Suburb you can Afford (Whilst Renting in a Suburb you want to live).
One of the biggest problems buyers encounter is being able to afford a home in their local real estate market.
But if you think about why people buy property, it’s usually to gain financial security. For example, $1000.00 in 2018 has less value than it did in 1980, so buying something that increases in value as the cost of living goes up makes great financial sense.
If you can’t afford real estate in your local market, then change suburbs, states or buy a smaller property. Consider property in a regional area outside a major city where the properties are half the price.
An asset, like a house, gives you long-term security, just like having a child, so that you have someone to take care of you when you get old.
5 Tips For Single Parents Buying A House
2. Share Property Ownership.
If the banks don’t initially approve your finance, make your situation more attractive by:
- Finding someone that wants to purchase a house too and buy a property together. This will increase your loan serviceability and get your finance across the line. You could buy with one other person or a group of people, perhaps a family member, siblings or other mums in your situation.
- Having a guarantor can assist to your loan application. They give the banks a guarantee that you will honour your monthly loan repayments and if you can’t make loan repayments, the guarantor will, on your behalf. Usually, guarantors are your parents or a close family member.
3. Only Buy When there is a Hot Sale.
The property market moves in cycles, each cycle is different, but there is a long-term pattern we can go by. Over the last 60 years, prices have moved upward steadily, hitting a high point and then steadily moving downwards. Then the cycle repeats.
It could be a five-year boom followed by a two-year correction or a seven-year boom followed by a six-month correction. It’s anyone’s guess as to how high or low prices can go. Smart buyers are buying property when sellers are struggling to sell.
When prices are going up, it’s a frantic time to get into the market. You may have heard a horror story of a buyer overpaying, compromising on the house or land size. When prices are going down, there is less competition, prices decrease and properties don’t sell unless they’re discounted.
4. Save Money by Negotiating like a Pro.
Don’t allow the real estate agents advertised price to put you off. A house is only worth what a buyer is willing to offer and what a vendor is willing to accept. In theory, you could buy a house for one dollar.
You never know what someone’s motivation is to sell their property. Giving someone a price they’re willing to accept is helping the seller move on to the next chapter of their life.
Hot tip: You can submit multiple offers on different properties to increase your chances of finding a good deal. The law binds every offer, with a three-day cooling-off period when you submit the offer. That means you can get out of the offer/contract without giving a reason prior to the 3 days ending.
A wise buyer’s agent is a great way to source cheap property and negotiate a low price without going through the effort of the buying process. A good buyer’s agent should save you the value of their fee, if not more.
5. Rent Money is Dead Money.
We have all heard this saying, but sometimes, it can feel like a never-ending cycle. So how do you get out of the rent cycle?
Like any exercise routine, that seems like there is no end, starting with a simple step in the right direction is the key. You would be amazed at what you can achieve once you gain a bit of momentum in your favour.
The first step is to implement a savings plan that you’ve tailored to yourself, space it out over 5 years (the average real estate boom cycle), you will be amazed at what you can achieve.
Mark Ribarsky is the founder of Wise Real Estate Advice Pty.Ltd, a buyer’s agent and property manager. Mark has a Bachelor of Business, is a fully licensed estate agent and is a residential property developer.