4 Common Mistakes of First Time Buyers
It is a commonly held belief that the average adult will own three different properties in their lifetime. Spaced over the adult life, that means one transaction every twenty years. Comparatively, the team at Strike have helped conduct in excess of 200 transactions in the last five years. Having helped so many clients, we’ve come across almost every conceivable ‘mistake’. Four of the most common can be found right here. Make sure you learn from these mistakes – don’t repeat them. As some of them can set you back thousands of dollars…
Starting with your dream home
Instagram and vision boards have everyone dreaming of beautifully adorned, sprawling mansions. However, it is unlikely that you will start with this home. In most instances those homes take a lifetime to build up to and are almost certainly out of reach to the first-time buyer.
Should you sacrifice everything? No – after all, it is likely that what you appreciate many others will also when it comes time to sell or rent the property. But let’s keep the upgrades to the essentials that can’t be retrofitted. Think about your ceiling heights, versatility in the rooms, ducted air conditioning system.
Your budget will likely constrain you in what upgrades you put into your home, so make sure you are clear on what is possible BEFORE you fall in love.
Missing out on grants & concessions
The number one challenge that most first-time home buyers face is saving a deposit. That is why there are loads of incentives to help shorten the savings timeline. Between the First Home Guarantee (FHBG), First Homeowners Grant, First Home Super Saver Scheme (FHSSS) and stamp duty exemptions as little as 5% deposit will get you started – so long as you stick to the budget.
The budget is critical because if you go above it, you start to lose grants! In capital cities of Queensland, the following restrictions are in place:
- FHBG has a price cap of $700,000
- First home concession only applies to homes under $550,000 ($250,000 for land)
- FHOG requires your value to be less than $750,000.
Confused? Imagine adding ADF specific entitlements like HPAS and DHOAS – then co-ordinating them…. If can become a huge challenge. That is why getting the assistance of a Qualified Property Investment Advisor (QPIA) is critical to making sure you get the most out of your grants and entitlements
Choosing the wrong team
The people you need to assist you buying a home will vary depending on the complexity. It could be as simple as having a broker, solicitor, and building & pest inspector. However, more often you will also need a builder, architect, and project manager. Then if you have (or turn it into) an investment property you will also need a quantity surveyor, property manager, tax agent and insurance provider.
When you find excellent providers, the process will be seamless. But if you even have one party who isn’t up to standard you will notice it immediately. Always do your research and check the credentials and qualifications of the team you choose to make sure you are getting the best support.
Choosing a poor location
All too often first time buyers want to race out and buy a house to live in, regardless of where they are in Australia. They get a heap of ‘free money’ from the government and move in while waiting for the property market to take off and make them millions. After all – that is what worked for mum & dad.
But let’s get real – the property market dynamics have changed since mum and dad bought their first time buyer – and there are now 15,000 suburbs in Australia. At any time, some of these suburbs are experiencing ‘growth’ and some are experiencing a ‘correction’. Some locations are poised to grow (huge infrastructure projects and population growth expected), while some will stagnate after huge growth.
If you’re living in an area that is in a correction or growth is stagnant, you might end up wasting all those entitlements and grants by rushing ahead and buying in your own backyard. Be wary & consider other strategies like ‘rent-vesting’. This concept wasn’t used in you parent’s time but is perfect for some younger Aussie’s.