Investn helps first-home buyers leap deposit hurdle

With the demise of the home builders grant of $25,000 and fewer state and federal incentives for first-home buyers, many people trying to get onto the property ladder are running into financial roadblocks.

It's now harder than ever to get into the market, with the recent property boom not helping. It now takes around eight years on average to save for a deposit.

Recognising that many prospective buyers were denied access to the market as they lacked savings, Investn has developed an innovative new strategy to help people take those crucial first steps into real estate ownership.

Under their strategy, individuals provide as little as $15,000 - $20,000 depending on the location and price of the property, which is used to take care of costs such as stamp duty, conveyancing and mortgage fees. Investn provides a ten per cent deposit in return for a stake of the same size in the property, where the rental income and capital growth is shared.

The great part is, the investor has the title of the property directly in his or her name with the choice to tap into the equity in the future for further investments.

There are no timeframe limitations or restrictions on the length of time investors have to own the property; the only restriction is that they cannot buy out Investn’s portion of ownership. Investn is in this with the investor, as the company is taking on the risk in the initial years where there is no, or limited, equity in the property.

All properties are managed by an external, independent real estate agent who disperses rental income directly to the investor each month. 

It also means clients of Investn can choose where to live and where to buy an investment property to rent out, as there are no stipulations the purchased property must be the principal place of residence, as is the case with most government incentives.

Investn chief executive Scott Fraser said the government incentives were very attractive for first-home buyers to buy property in less established suburbs but far from their desired place of residence.

“The better strategy is to be a rentvestor, living in the location you really love with all the amenities and infrastructure that you are accustomed to,” Mr Fraser said.

“Removing emotion from the equation is the best option: buying in places you may not wish to live yourself but focusing on affordable properties that will deliver capital growth and good rental returns.”

He said many of their clients don’t want to move into outer suburbs but wish to rent in a suburb of their choice for the next ten years while building a property portfolio comprising investments in more affordable growth locations.

“Later, they will sell the investment property and buy a home in the suburb they’ve always aspired to, with a far smaller or even no mortgage.”

Opportunities abound

To ensure properties are investment grade, Investn has a property acquisitions team researching and sourcing the best opportunities via its national network, completing due diligence to achieve good cash flow in fast growing corridors.

Mr Fraser said even in a property market where prices are perceived to be retreating, there are still attractive areas with growth opportunities and properties that could generate long-term investment value.

“As long as location research meets our strict investment criteria with strong future capital growth potential, we will consider it,” he said.

“It's not about timing when to get into the market, its time spent in the market that matters - no one ever remembers if they purchased at the bottom or top of the market after ten years.

“By the time you have seen the bottom of the market, it’s often too late and prices have begun to rise.

“There is never a bad time to get into the market - the best time is when you have the ability to take out a mortgage and get an approval, as this always varies with length of employment, or borrowing capacity.”

He added that as interest rates rose and normalised, borrowing capacities have diminished, with a 1 per cent rate increase reducing borrowing capacity by 10 per cent, further bolstering the case for entering the market sooner rather than later.

Selection criteria includes having full-time employment with a gross income of at least $70,000 per annum for an individual and $120,000 per annum for a couple, at least six months in their current job and a good credit score.

The entire finance process is managed by in-house loan writers to arrange mortgage approval through their non-bank lending partner for a more efficient process.

Go to investn.com.au for more information or click on this link for a free, no obligation chat with one of their senior property mentors to see if this is something that could work for you.