August 15, 2019 by Dymphna

Can’t afford a home? Read this

Worried about ever being able to buy your own home? I’ve got some rolled-gold advice for you…

How do I afford a house?

Is there a hotter hot-button topic in the country right now? This is a topic that can really get the talk-back show lines humming.

And normally we see it framed as a feud between entitled boomers and coddled, smooshed-avocado munching Millennials.

But housing affordability affects everyone. And for every millennial student I’ve had wondering how on earth they were going to be able to afford a house, I’ve had a divorcee, or a retiree wondering how they were going to get a secure roof over their heads at this late stage of their career.

So chill out, Australia. We’re all in this together.

So the million dollar question (in some suburbs) is ‘how do I afford a house?’

Let’s think about this through the lens of our deal-maker mindset.

Remember, the key thing I want you to learn is that the words ‘property’ and ‘deal’ should be substitutable. Every time you see ‘property’ running about on the footy-field of your vocabulary, I want you to imagine ‘deal’, on the sidelines limbering up, ready to get tagged into the game. 

So now, obviously, “How do I afford a house?” becomes “How do I afford a deal?”

Now if that comes off a little strange, it should. “How do I afford a deal?” is a strange thing to say. It’s not something you’d ever hear out of an investor’s mouth.

Because I promise you there are deals to suit every budget.

(And I really mean every budget.)

And so the question isn’t, “How do I afford a deal?” The question should be, “What deals can I afford?”

(And really, even ‘afford’ is too narrow. It should really be “What deals can I pull off?”)

Now I know this is going to seem strange to many people. They’re going to find it hard to think of their principal place of residence (PPR) as a ‘deal’.

But that’s exactly what we have to do. If you can’t afford a house to buy and do nothing with, start looking for a house that you can buy and turn into a deal.

You’ll suddenly find you’ll have a lot more options.

Let me give you a few examples.

When my daughter Samantha was looking buy her first place we found her a cracker of a deal.

We found was small block, right on the water, that had just the zoning we were looking for. We took the block and built a duplex with a strata title. She could have sold both of them on completion for a nice little $250,000 profit.

But Sam didn’t do that. She sold the back unit and used the proceeds to pay off almost all of her debt (including a private loan from her mother at quite a reasonable rate).

She now lives in the front unit. There’s still a little bit left on her mortgage, but she covers that by renting out rooms to her boyfriend and another housemate.

In case that’s not clear, she now lives mortgage free, in her own home – her first home!

Or do you want better?

One student of mine built a 6-bedroom property in Brisbane. It was strata titled in two, with a 3-bedder on one side, and two storey building on the other, with a 2-bedder below a self-contained 1-bedroom bed-sit above.

He now lives in the 1-bedroom bed-sit and rents out the downstairs and the other unit. As a result, his own home currently pays him $3,000 a year for the pleasure of living in it!

The point is, neither Sam or this bloke could afford to buy their own home. But they could afford to do a deal that got them into a home.

And really, isn’t that even better?

So if you know someone stressing about ever being able to buy their own home, ask them if they’ve looked at it through the lens of the deal-maker mindset.

It’s a whole new world.