The Investors v Owner Occupiers
Let’s discuss two types of First Home buyers. The Investors and the Owner Occupiers. These are two snapshots of a very large spectrum of buyers overall, but most will fall close to one or the other of these examples.
The investor sees their first home acquisition as a stepping stone to their financial future, they have a plan for acquisition, an exit strategy, they have likely spoken to an expert and educated themselves on ways to add value and have worked out or been advised on the facts and figures associated with their potential purchase. They are carrying out an analytical purchase. They may be buying an existing home and foregoing their first home owners grant in return for large long-term profits. They may have to put up with a less then new home (fixer upper) in order to get the kind of valuable and well-located land they need to implement their strategy.
They may not be purchasing a property that they can afford to add value to right away, but they’ll be adding value in the future just before it comes time to sell. Instead of saving for their next home they might be saving for their first development (about the same cost normally) and planning to use their profits to afford an even better next home, or second investment. This would be by far the number one strategy for a first-time buyer. But it’s not always affordable, suitable or even known to those just starting out and so other simpler strategies are often implemented first. There are many ways to Invest in real estate. Some which cost nothing (yes nothing) and some which cost more then the property itself. But an Investor gets this info and makes a decision based on the facts.
The second and vastly more prolific type of the first home owner is an Owner Occupier. They may be looking to move out of home or buy something new or find something big enough for a family. They may not be interested in “Investing” and may never be. They have a good idea of what they want being bedrooms, loungerooms, pools, or to be located near the things they enjoy or require to be close to. They may be receiving very general advice from trusted friends and family who may or may not have had success or failure when they bought property and whatever they did or didn’t do will be what they say to do or don’t do.
They may have thought about future growth and their second home. Their research may be largely speculative and potentially have holes in data where they have no experts to advise them. They may be concerned about nabbing a bargain or more specifically getting a discount on the advertised price from the agent. They will be looking in the best area they think they can afford or where they have been told to look and they may be buying outside of traditionally valuable areas and instead looking for larger homes further from the CBD.
There is no right or wrong way. But as you can see one of the above is exposed to a lot more risk than the other. They may not know it, or ever realise the true cost of it, which is why it goes unnoticed and why help for first homebuyers is so hard to find. Because why solve a problem which is hidden? Because everyone deserves to have the best first step in life and with purchase prices so astronomically high right now the decision to buy a home has become a potentially life saving or life ruining choice.
Luckily the solution is simple. Treat your first home as an investment, even if it’s just to live in because your first property is unlikely to be your last. Seek advice for your first purchase, even if you think you know what you’re doing. Have a 5-year plan and think about where your next house will be and what you need to achieve that. Do your research and make sure you are not risking your deposit on a gamble.