Its not everyday a 16 year old boy buys a house, but this is where our property journey started back in 2003. Still in school and with no facial hair (not much has changed there) I purchased my first property.
Now I know you are thinking – how does a 16 year old afford or even buy a house? Good question. The short answer is I did not do this on my own, my parents were central in making this happen and it wouldn’t have been possible without them. From a young age property intrigued me, having seen my parents and grandparents involved in different property endeavours. I grew up having lived in 7 different homes as my parents went after business and property opportunities. They would talk about what we were doing, buying and moving, holding onto what they had and leveraging on their homes - and of course hearing the ‘I wish I never sold that’ comments. I learnt as much as I could and saw that hard work and effort now was worth the long-term gain. Without knowing at the time, this began to shape my view on property - not just as a place to live, but a platform for growth and an opportunity to pursue what interested me.
One element which set me up for purchasing my first home was that I became great at saving. During my schooling I worked as a cleaner in the afternoons and in weekends, the majority of my money went straight into a bank account which I never touched. My parents watched me make a commitment to save money as I grew up – my Mum tells it like this: “We wanted to instill in our children good financial skills - I don't think you can start to early. We started giving Caleb weekly pocket money when he turned 5-years-old, it 50c and went up 50c a year. In getting pocket money, all our kids were required to save 10% of it, but it wasn’t just his pocket money that he saved it was any money gifted to him or money he earnt. While most kids would save for a toy, Caleb saved to watch his bank account grow. One Christmas to keep to his ‘budget’, he bought and wrapped a can of fizzy drink and gave it to his sisters - as a joint gift to share!”
So what can a schoolboy afford to buy in 2003? I purchased a 3 bedroom fibre cement home in the kiwifruit capital of NZ - Te Puke. Purchased for $96,000 with a 10% deposit with a rental of $180 per week. Now this was a good buy, but the credit for the find and making it happen goes to my father who was had been encouraging me about business and property. I asked him to share about his intention in giving a high schooler the responsibility of a mortgage. ‘I was keen for each of my children to have an understanding of how business and finance works. When Caleb told me he wanted to invest all his savings to buy a property, I was really motivated to help him find one. We chose Te Puke because the prices were low compared to Tauranga, it had key infrastructure (banks, school, employment) and the rental agents told us that there was strong rental demand from local economy (fruit growing) - this has proven true over the past 15 years.’
The property itself wasn’t anything special, neither was it a great bargain at the time - rather just a traditional cash-flow investment property. Purchased based on return and location – not because it looked pretty or was a home for me in 10 years time. The numbers stacked up and even when paying a property manager to look after, interest, and allowing for maintenance it was cash flow positive (ie, was going to create more money from rent than all the interest and expenses combined).
When I think about my first property the key lessons I have learned are:
· Don’t be afraid to get help – the more understanding and knowledge you have the more confident and comfortable you will be. Whether its through a friend or family member who has been there before, a mortgage broker or financial adviser, upskilling through books and blogs – education is essential and will create confidence.
· What are your expectations? Everyone is different and there are many different reasons for property ownership which will impact your decision making. People often are so focused on ‘the dream’ which may be a long way from reach they can’t see a path to get there. Having interim steps or goals which are more reachable and conceivable, may ultimately help you achieve your final goal sooner.
· Start now. Mark Twain summed it up well when he said ‘The secret to getting ahead is getting started’. Whether it be reading that book, understanding your financial position to know what you can afford and creating a plan on how to reach your goal, researching and viewing properties –be it property related or another personal goal you are working towards, the best time to start is now.
I understand not everyone has money in their savings account to afford a deposit on a house – especially seeing how much the market has changed in 14 years. However, I encourage people to take timeout to consider what their goals are, know what their options are and acting on it.
We asked Kayne Wahlstrom, owner and founder at Money Empire to share his advice for people considering options when it comes to their property journey, he says: ‘It’s important to look at your options. From KiwiSaver withdrawals to Welcome Home Loans to family equity loans, there are so many options to buying your first home. For us, one of the joys of what we do is being able to sit down with our clients and really nut out what they could do to get into their first home – even in the Auckland market. We like to see the look on our clients’ faces when we’re able to point out for them some of the options they hadn’t yet considered.’
For anyone looking to buy their first home or wanting to find out what they financially need to do to get to that stage, we would recommend talking to experts like Money Empire – their team who are based in Auckland are friendly, speak your language and offer free consultations.