5 Alternative Ways To Buy A Property
The real estate industry has boomed in the past 10 years, with house prices almost doubling in this amount of time. Due to this, many Australians have been looking for ways to get into the property market but may not know how many options are out there.
In this article, we explore five different strategies commonly used to buy property in Australia which you can use to open the door to your very own piece of real estate.
1. Traditional Savings Approach
The tried-and-true method involves disciplined saving over time to accumulate a substantial deposit of about 10-20% of the property value. While it requires patience and financial discipline, this approach is a reliable way to secure a mortgage and enter the property market.
2. Shared Equity Partnerships
Collaboration can be a powerful tool in the property world. Shared equity partnerships allow you to pool resources with others to purchase a property collectively. This approach not only eases the financial burden but also opens doors to properties that might have been out of reach individually. However, keep in mind that since the property is under shared equity, any profits will also be split among the equity holders of the property.
3. Rent-to-Own Models
Rent-to-own arrangements bridge the gap between renting and owning. They allow you to live in a property while gradually building equity, eventually leading to ownership. This approach can be particularly helpful for those looking to enter the property market without a significant upfront deposit. This model allows the buyer to slowly ‘purchase’ the property at a set price from the vendor/company who bought the property. However, this can be more expensive as the buyer will be paying rent as well as an agreed weekly or monthly amount for the property to be purchased at the end of the term agreement.
4. Leverage Your Superannuation
Your superannuation can play a role in property ownership through a Self-Managed Super Fund (SMSF). This approach allows you to invest your super funds in property, potentially providing both a retirement strategy and a property ownership avenue.
To purchase a property through a SMSF, the property must:1
- meet the ‘sole purpose test’ of solely providing retirement benefits to fund members
- not be acquired from a related party of a member
- not be lived in by a fund member or any fund members’ related parties
- not be rented by a fund member or any fund members’ related parties
5. No Deposit Solutions
In recent years, a relatively new finance option has emerged with the goal to remove the requirement for the large deposit needed by banks. Innovative programs now offer solutions that require little to no upfront deposit. These programs are designed to empower a broader range of individuals who can pay mortgage repayments but find it difficult to save for the 10-20% needed for a deposit.
In conclusion, the path to property ownership is no longer limited to a single route. With a range of strategies available, aspiring homeowners can tailor their approach to their unique financial situation and goals. Whether you’re starting from scratch, exploring innovative solutions, or leveraging existing assets, the dream of property ownership can become a tangible reality.
Our team at R2B are experts at getting hundreds of Australians into their own home with little to no deposit. The R2B program offers individuals the opportunity to get out of renting and into the property market through our vertically integrated group structure, allowing us to take care of every step of the journey.
If you are interested in getting into your own home with little to no deposit, contact us today!
Phil Leahy
CEO of R2B Group
Disclaimer: This article is for educational purposes only and not professional financial advice. Please seek personal advice before making any financial decisions. The views expressed are the author’s own and not affiliated with any organisation. The author is not responsible for any losses or damages resulting from reliance on the information provided