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Young Investors

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For several years now, there has been a significant focus on how difficult it is for young people to break into the property market.

Compared to 30 years ago, there’s now twice as many Australians renting, and for many Generation Y’s now in their 20’s and 30’s, buying their own home is still an unattainable dream.

Not helping the cause is figures released by McCrindle that suggest four decades ago, an average home in a capital city was 5 times the average annual earnings, and in 2013, it was as much as 10 times the average annual earnings.

Whilst this is certainly the case for some, it doesn’t necessarily mean the younger generations can’t become property investors. Investing in bricks and mortar can be an excellent stepping stone to eventually owing your dream home.

For the many professionals who work in or close to the CBD, high property prices can be a barrier to living in that vicinity and hence enjoying the ease and efficiency of short travel times. So what we are seeing is a number of young professionals investing where they can afford and renting where they want to live.

Depending on your financial position, a 5% deposit is often all that’s required to purchase an investment property. In some situations, such as when parents act as a guarantor, you can borrow up to 105% of the cost of the property, which includes purchasing costs such as stamp duty and solicitor fees.

The idea of ‘rent money is dead money’ only applies if you aren’t putting your savings towards something else, which will appreciate. The benefits of investing whilst renting are tangible in the short term – renting where you want to live, and substantial in the long term – getting into the market and building your investment portfolio.

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