If you remember back to the process of buying your very first investment property, ‘stress-free’ probably doesn’t come to mind; and whether you now own one or multiple investment properties, you will probably always remember the big step you took.
With property ownership becoming seemingly tougher for future generations to achieve, helping your children set themselves up for their future may be crossing your mind.
There are many things that you can do as a parent, grandparent or guardian to help prepare your children for their property future.
Firstly, advice is free to give (whether it’s taken freely is another thing).
This can start from a very early age. The idea of piggy banks and pocket money is invaluable, providing life lessons in the value of money.
Open discussions about money can and will show children the importance of healthy money management throughout their lives.
‘Lived and learned’ experiences: you have these to share. If your children are looking at buying property, what advice would you have wanted to hear as a 20 or 30-something-year-old? Hearing that you need to get into the property market without hearing what it takes to do so, is unlikely to prove helpful advice.
Allowing your child to live at home a little longer in order to save for a deposit may be another way you could assist them, without taking an overt financial responsibility in the purchase. However, there will come a time where they will need to pay their way; so, introducing them to the cost of homeownership by asking them to contribute to the cost of household expenses is a practical way of preparing them for managing those household expenses of their own.
Not everyone is in a position to help financially, but assisting with deposits can help fast-track their home ownership journey. Of course, they will still need to prove their ability to make repayments on the loan in order to be successful borrowers.
Another option is, as parents, to go guarantor on the loan. Many first home owners are finding their way into property this way. Without outlaying a financial expense, this will use your property as security; but, if the borrowers happen to default on their loan, as guarantor you will be responsible. A finance specialist will provide detailed information around such options.
Lastly, a joint venture or partnership in co-owning a property may be beneficial for both parties. Not only are you helping your kids enter the property market, but you are expanding your own portfolio at the same time.