Team Up With Your Bestie!

Team Up With Your Bestie!: October 23, 2013

Team Up With Your Bestie!

I remember when I was in primary school, many, many years ago, my best friend Vicky and I desperately wanted Redskins and Fags. Just to clarify, these were the de rigueur lollies of the 60s. The problem was neither one of us had enough on us to buy them individually but we worked out that if we pooled the little we did have, we could afford a packet of Fags and one Redskin…victory was ours! I smile wryly at the thought of those lolly names as they stand testament to a bygone era but I guess the point I make is that at eight years of age, Vicky and I had hit on something. We worked out that compounding resources gets results and we were able to get our lollies and feel a sense of accomplishment at how clever we were.

This lesson has stood me in good stead over the years as I went on to apply the simple, yet effective strategy to buying property. My first property to launch me into the market was an investment I split with my sister. At some point we sold it, took the proceeds and went on to buy our own houses. I learned quickly how powerful this strategy is if applied as a business proposition, a means to an end. It became apparent that if I were to duplicate this, I could create a property portfolio without the stress of doing it alone and rapidly create wealth!

I set forth and tried the co-buying strategy again with friends and did very well out of it. It appears that the learning principle of combining resources to maximise your leverage, was a lesson I learned in my tender years and such was its impact that I saw no reason as to why I shouldn’t utilise this brilliant strategy to purchase property, hey, it worked for Fags and Redskins, why not property!

I appeal to you to think about this strategy to either buy your own principal place of residence or an investment. Buying with others, be they siblings, relatives, best friends or even business partners, allows you financial mobility, independence and a head start into the realm of home ownership in a diminishing first home buyer market leaving many first home buyers in its wake.

To demonstrate my point, I refer to depressing statistics of recent times:

In February there was a total of 2,153 grants given to first home buyers, compared to 3,324 in February 2010 and 3,115 in February 2009.
It is also well below the recent peak of 4,981 in June 2009.
Source REIV

Because of higher prices, today’s first home buyers are paying much higher mortgage repayments than 15 years ago. Average first home loans have more than tripled since 1996. Average weekly earnings have only doubled in that time. This is putting massive pressure on first home buyers.
Source Australians For Affordable Housing

The number of approved home loans fell by 1.2% in August, with the proportion of first home buyers taking loans, slumping to a nine-year low.

According to the Australian Bureau of Statistics (ABS), the value of owner-occupier loans decreased by 3.9%, while first time buyers accounted for only 13.7% of all home loans. It was the first time that the overall value of approved home loans had fallen for eight months, coming down from a five-year high.

Many economists are now saying that Gen Ys aren’t interested in owning their own property. They would rather rent than own; they would rather travel than invest in their financial security…well that’s the view being peddled by economists. Seriously? That all seems a tad too convenient from where I stand. Why not just admit that they have been badly let down and who can blame them for not wanting to be saddled with HECs fees and a $595k median house price. Let’s get real! How on Earth can they afford this treacherous combination? Of course, in the face of all of this, resignation follows and this resignation and sense of being excluded from the great Australian dream, has been interpreted as disinterest.

Over the September quarter, in seasonally adjusted terms, Melbourne’s median house price has increased by nearly 9%, according to the Real Estate Institute of Victoria (REIV).
Melbourne’s house price median is now $595,500 from a revised $547,500 in the June quarter, pushing it to a new peak.
Previous high price recording included $559,000 in December quarter 2010.
Source Property Observer and REIV

My contention is that if they were given the means, the education and the encouragement, Gen Ys would be rolling up their sleeves and signing on that dotted line and catapulting over the threshold from renter to home owner in a heartbeat.

Co-ownership is the way forward for this group. The sooner Government, banks, and those facilitating property ownership realise this, the sooner the cries for affordable housing can be heeded. Affordable housing isn’t solely reliant on grants, developer incentives and the like, affordable property is about mindset and splitting the cost of mortgage, household bills, rates, repairs etc. Parcelled up, it is a very attractive proposition and should be considered as a means to an end and a powerful solution.

Some would point to the negatives of home co-ownership. What if, we have a falling out? What if one of us loses his/her job? What if one of us gets married? What if…what if…what if. These are great questions to ponder but they should not stop you from going ahead with such a venture. A co-ownership contract, available through Home Addressed, offers you peace of mind to all parties concerned with a co-buying structure. It addresses the concerns and challenges that may arise from the partnership. Treat it as a business partnership, conduct your due diligence, work out what you can afford, tie it up legally and then exhale…you are home!