Investing in real estate in Australia may seem an impossibility or far off dream. After all, you need to save a whopping 20 per cent deposit to get a home loan from a lender to avoid mortgage insurance, don’t you? However, if you’re resourceful, there are ways to invest with little money in real estate. Sometimes, you can even invest in real estate with no money saved at all. You will need to think outside the box, do your homework, and possibly be prepared to make a lifestyle change but you will have your foot on the first rung of the property ladder.
Here are some tips on how to invest in real estate with little money in the piggy bank to get you started.
Move to the country
A move to a country town for a couple of years could be the start you need. I recently saw a house and post office advertised for sale in a rural town in Victoria for $150,000, with a guaranteed annual income from the post office of $50,000 per annum. What a great way for a young couple prepared to make a lifestyle change for a few years to get a start on the property ladder!
Invest with others
Team up with family members or friends and buy an investment property together as tenants in common. Once again, look for bargains in rural areas with good rental returns. For example, I live in a delightful rural town in New South Wales. A clean and neat two-bedroom unit here can be bought for under $150,000 and rented out for around $230 per week. A deposit of $30,000, divided between three joint owners, would mean you would only have to put in $10,000 each to get that foot on the bottom rung of the property ladder.
Look into properties advertised as being sold with “vendor finance” or “rent to buy”
With vendor finance or rent to buy arrangements, instead of getting a loan from the bank, you pay the negotiated sale price to the current owner of the property in agreed instalments. You may be able to convince the vendor to go ahead with the sale without a deposit or a very low deposit and be able to negotiate smaller instalments for the first couple of years, increasing over time. As always make sure you get independent advice to make sure you completely understand these arrangements.
Do a swap deal
Keep hunting through those real estate sites and you may find a vendor who is willing to do a swap on a house or block of land for a boat, caravan or who knows what else. When it comes to how to invest in real estate with no money this can be the solution to your dreams if you have something suitable to swap.
So there are indeed ways to invest in real estate with no money, or very little money, but you do need to keep a close eye on the real estate sites for unusual opportunities and be ready to grab them when they arise.