Smash Your Avo And Eat It Too

Are you aged between 23 and 37, and do you dream of one day being “financially free”? Well, me too.

For a long time now, the populist past time of “millennial bashing” has been heavily circulated through mainstream media outlets the world over.

As a generation, we have been indoctrinated to believe that we’ve been forever priced out of the market, that the “baby boomers” have hoarded all of the opportunity, that real estate is the asset class of the wealthy, and that ultimately, we’ll be treading the hamster wheel forever.

I’m here to tell you that is wrong, and that no matter where you’re starting from, you can not only buy your own home but achieve financial freedom, through Australia’s favourite barbeque topic - real estate.

For those of us starting out though, just how can you make it work?

1. Set your goals

Goal setting is really important when setting out to achieve anything. In this case, it is really powerful (read: essential) to understand exactly where you want to be in 1, 3, 5, 10 years time.

These goals could be things like: 

• Take care of ageing parents  
• Stop renting
• Earn $100,000 per year through passive income
• Travel 
• Buy my dream home on the beach 
• Spend more time gardening

It really is up to the individual, but it is critical to allow yourself to dream about what you really want, and where you ultimately want to be.

2. Financial IQ

It is important to be very clear about your current financial situation. Map out in detail, what your monthly spending is; and find all ways that you can reduce your expenses to the necessities, or must-haves.

(Yes. Smashed avo for brunch can still fit into this plan, as long as you’re budgeting for it!)

You may need to make sacrifices (like your $1,500 per year latte habit), but remember that it is your choice, and stay clear on the goals you’ve set.

Understand how you earn your money if you’re not full time.  Can you get contracts or even speak to your employer about having structured weekly payments that reflect the average amount of work you do?

Having “regular” income is very important to lenders. Don’t mistake “regular” income, with high income. It’s about consistency, first and foremost.

Once you understand your expenses, income, assets, and savings habits, you’re ready to move forward to the next step.

3. Get educated

There is a lot to know and learn about property, and it is important to educate yourself. Listen to podcasts, read books, watch Youtube videos, Facebook webinars, talk to friends or relatives about what they have learned over the years, or ask for some help (hello!) and slowly build up your own knowledge.

Become a sponge for information. No, you’ll never learn it all, but understanding the current climate and appropriate lingo will go a long way to helping your success.

4. Develop your strategy

Here is where (I think) it gets really fun.

Exactly HOW are you going to achieve those goals you’ve listed?

Even if you are on a low income, with a very small deposit, it is still possible to get started. It all comes down to strategy and making your money work for you.

So, whether you’re lining up to buy a $50,000 property or a $500,000 property, the key points remain the same:

Buy under market value- This way you gain “instant equity” from the moment you buy. Typically, aim for at least 10% below the market value so that you can use the equity for your next purchase.

Cashflow positive- Make sure that your investment is cashflow positive after all expenses. This will add to your serviceable income, and make borrowing money for your next purchase much easier.

Capital Growth- The property needs to grow in value, every year, so you have a compounding and appreciating asset which will give you more equity over time. People think this is easier said than done, but asking for the right help will get you on your way

There are many more strategy components we could discuss, but if you can get these three points right, you will be able to continuously leapfrog from one property to the next. Sometimes as quickly as 4 properties in a year (or more). This is how you will build a portfolio that can fund the life you’re aiming for.

5. Buy within your means

Always make sure that you’re buying within your means. Even if that means starting at the bottom end of the market.

Remember, this is a process. Take the journey in steps, and follow your strategy to continuously increase your cash and equity position.

6. Understand your appetite

How active do you want to be in this process?

Some people want to slowly save and buy their one forever home. Others want to buy enough properties to have a small passive income. Some will want to be developers or property tycoons.

Your journey is for you, and no one else, and it is important to take the path that most appeals to you.

So, fellow millennials. We’ve got this.

Dream big, and then dream bigger.

It is entirely possible to create the lifestyle you truly desire, all with some careful planning and execution.

That’s what I’m doing, and I hope you do too.