Month: December 2019

Renting Basics: Going from Renter to Owner

Before accruing all of the finances they need to make that leap into home ownership, the vast majority of Australian first home buyers would have spent time renting. While renting throughout your whole life makes sense for some of us, for others the final conclusion of being a tenant comes when we buy our own home. So how can you join the party, and transition from home renter to homeowner?

Transitioning from Renter to Owner

There’s a general progression that people on the real estate journey, one that most of us follow at some point in our lives. On the day we move out on our own, we are following generations of people before us, and while not everybody’s path is identical, there are nonetheless well-trodden sections to move through.

Despite the increasingly tough property market conditions, the great Australian dream of buying a first home is alive and well, with the proportion of housing finance commitments coming from first home buyers sitting at over 15% according the the Australian Bureau of Statistics (ABS).

Before accruing all of the finances they need to make that leap into home ownership, the vast majority of Australian first home buyers would have spent time renting. So how can you join the party, and transition from home renter to homeowner?

How Much Will it Cost?

It’s easy to read the frequent news reports about skyrocketing house prices and historic low housing affordability and be intimidated. However, should you know where to look, and how to temper your own expectations, finding affordable housing for purchase is not as difficult as you might think.

In fact, as reported in the Courier Mail in some 111 suburbs in the city of Brisbane, rent is actually higher than the ABS’ figures on weekly housing costs for people with a mortgage. The median $453 weekly spend for mortgagees equates to approximately 18 per cent of income spent on housing costs, while renters were finding themselves spending 20 per cent.

As you can see, perhaps breaking out of the cycle of renting is not as out-of-reach as you might think.

How Can you Get There?

One of the greatest hurdles to buying a home can be saving the required deposit. A recent home loans activity report found that for most couples, saving the approximate $100,000 for a home deposit will take on average 4.2 years nationwide. In some of the larger cities where property values are higher, however, that median stretches to as much as 7.9 years.

Having to grind out savings for up to eight years is, for many people, simply an unreasonable ask. There’s a silver lining though – you shouldn’t have to do it on your own. Each state and territory in Australia offers its own first home buyer incentives, including grants (up to $15,000 in Queensland) that can help you on your way to building your deposit. No-one is saying it’s easy, but thousands of Australians every year make the jump, and you can too.

From Tenant to Landlord

Perhaps you’re interested in real estate ownership as an income stream, as well as or in place of just owning a home for yourself to live in. Owning investment property is a great way to build your assets, so if you don’t necessarily want to move to the place you’re buying, that doesn’t mean you should disregard the opportunity to buy altogether.

Building up a property portfolio as an investment is one of the further branches that your real estate path could take, so keep in mind that your first home buyer benefits don’t have to be targeted towards a property you’re going to live in.

Buying your first home doesn’t always mean the end of your renting life, but for some people it’s the reward at the end of a long real estate journey, often through many rentals and landlords. Savoring that moment where you’re no longer paying someone else for their house is just the icing on the cake.

We buy houses Rocklin Ca

Tenants: do you know what you’re covered for?

Tenants are much less likely than homeowners to have home and contents insurance. But there’s no reason why tenants should be putting themselves in a position where they could be out of pocket from risk of theft and accidental damage.

One misconception from tenants is that they assume their belongings are covered by their landlord’s policy. This is incorrect. The tenant is responsible for their contents in the property. The landlord is responsible for insuring the building and any furnishings provided. And for those young tenants, you should not assume you are covered by your parent’s insurance either, because you’re not.

A common reason for renters not to take out home contents insurance is the high cost, not having enough possessions to make it worth the while, and the fact that it is not considered an ‘essential’.

For many young people balancing increasing rents, credit card debts and the general rise of cost of living, home contents insurance can often be the first expense to go.

Scrimping on insurance is a false economy. Once you take stock of just how much your possessions are worth, paying for home contents insurance to protect your possessions will seem worth it if anything should happen to your belongings later down the track.

Another reason for renters to acquire home contents insurance is the time it takes to organise the insurance policy. With so many of us being time-poor, researching insurance policies and then setting them up is often a task that is put off from week to week.

As busy as we get, it’s important to set aside some time to get organised with mundane things like organising insurance. Try to set aside some time to jump on the internet and do some
research. Narrow down your research by making a list of top three companies who you think have a suitable policy for you and then contact each one to see who can give you the best deal.

You don’t want to be in a position where it’s too late and you are kicking yourself for not taking out a home contents insurance policy. Don’t put your personal belongings at risk: insure!