“I Have a Dream, In Real Estate to Invest In…” I really hope you sung this along, and it made you smile.
If you are reading this article, it means that you want to invest in real estate and you are not really sure about how much deposit you should take.
First Things First
You need to think about how much money you want to take in order to buy a house. It can be from personal savings or from other means – it is still a tough decision.
Experts say that you need to have 20 percent of the price of your desired house, sometimes it’s not the case, even if it’s ideal. You shouldn’t forget about the fact that alongside the house, you need to cover other costs: building inspection, fees, and stamp duty; this means that it can get quite pricey.
Other industry experts state that you would actually need more than 20 percent, because it might not be enough, considering all the costs that are implied. They say that if you invest lower than this, it can cause a lot of issues, considering the possibility of a price fall, and then you would own the bank more than the property actually costs.
Let’s have an example to understand better how the percentage works:
If you want to buy a house that costs $500,000, you will have to save $100,000, given the 20 percent. To that, you would add any buying expenses, stamp duty, building and pest inspections, that can go as up as $14,000.
Better Location, Higher Prices?
The answer to this question is yes. Prices may vary considering your desired location. There are properties that are much higher, and so you will need more money to have them, and it can be harder to reach the 20 percent. If you want a house that is in a pricey area and costs $1 million, you will need $200,000 to start with.
When Is the Best Time to Buy?
It’s better to be patient and wait for the best deals, in order to get your most desired place, right?
Firstly, you should look for areas that suit you best and that have long-term growth. Pay attention to any details, such as the development opportunities that may come up. For instance, the area should give the possibility of investing even further.
Take your time and wait for the best opportunity to invest your money in. If you don’t have the desired amount of capital, wait and don’t make hasty decisions. Rethink every action you want to take and decide on the best one for yourself.
All in all, if you want to invest in real estate there are some aspects you need to look into: how much you want to invest and how much money you need for the deposit. After that, you should think about all the extra costs, such as the legal fees, pest inspections, and stamp duty.