The Thought Process when Buying A Home
Hello, in this How To session, I want to tell a story. I want to tell a story that goes through everyone’s decision making process when they are looking to buy a home. Now, there’s a few things that goes on in your head. You’ve grown up in area and you know the area well. You know its attractions, its benefits, you know the great coffee shop and you know what’s available there to you. So you’re just starting out and you’re thinking where do I want to buy. Well traditionally, what happen is you’ll buy in the next suburb out or maybe a couple of suburbs out because quite frankly as first home buyers, it’s a really struggle to get into the marketplace. You want to potentially buy in the corridor that you’ve got your support network. There are three reasons why you would do that. You are basically doing it for one: affordability, two: to have some family network there and then three: to also have your friendship network there. Now, the trade off of that is what’s actually going to happen to the property value. We all know that the green field or what we call the new estates area are usually slower to grow in value. That’s what I call lifestyle buying and that’s ok. A lot of people that we deal with here at Empower Wealth comes in here to buy their first home and that’s what they want. They want that network, they want mom to be handy in case they need to look after the kids once we start having a family, they are all really valid reasons and that’s what we call lifestyle reasons. It’s about making sure we feel happy and comfortable on what we do.
The alternative side of those stories is what about those people who just want to get on the property ladder?
So they may make a sacrifice but that sacrifice is potentially a good one because it’s a wealth building sacrifice.
What they are saying there is they potentially want to come closer in to the city and get all of the lifestyle convenience and drivers and the scarcity of developed land. When it’s a scarce land and they are putting their foot on the ladder there, they usually are going to get an outperform result so the value of the property is going to grow quicker in the area compare to what it would be in the city-fringe locations. So that’s the difference. You would make the decision as a first home buyer whether you just want to put your foot on the property ladder and move up on that chess board as you buy property to property over the next course of 5 – 10 years or you are going to say no, I’m going to make a lifestyle decisions and have that nice family home, the picket fence, the dog and the two kids and we are just going to basically buy that now. So again, lovely decision to be making for the family but you basically not going to get that life from that wealth creation that can come out from taking the investment route in terms of trying to invest in property.
That’s a story that every household needs to consider and again, it’s a personal journey so don’t think you would be judge by that. Now for those people who do want to get that wealth going forward, that’s the step that they need to take in terms of moving closer to the city. Maybe buying a villa or a townhouse first and then moving into a bigger home as they can build up the equity in the first home and try to get into the marketplace that suits them best. They are the choices that you have as a first home buyer in terms of lifestyle versus going in property investment and wealth creation and I wish you all the best on your journey.