By Karen Phelps
Your OE or pursuing your property investing? It’s a hard choice but fortunately one you don’t have to make. It is possible to invest in property while doing your OE. Could you picture yourself sunbathing on a beach in the Caribbean while investing in property? Or perhaps partying with other backpackers in Rio knowing you can return home and buy another house? It is possible and here’s how.
STEP ONE – save up a deposit for your first house
However you choose to do it this will mean putting in a few hard yards. And it may surprise you to know that you don’t need an amazingly high paying job – you just need to know how to budget and make smart choices. For example do you really have to rent a room/house in Remuera or Ponsonby? Could you live a bit further out where rents are cheaper? Can you car pool? Can you cook rather than eating out all the time? There are all sorts of ways you can save which over time will equal a nice first deposit.
STEP TWO – feel the fear and do it anyway
As a newbie investor you will no doubt be terrified of making that first purchase. Don’t worry – we’ve all been there. And there’s always a reason not to buy. Perhaps you think you will wait until you meet that special person, until you’ve saved a bit more money, until…you get the picture. Think like that and you’ll end up an old person living with fifty cats in a council flat in Clendon. Do your research, investigate the market, go to property seminars and read books then bite the bullet and search for the right deal. Remember you are not buying a house you want to live in – you are looking for a house you can afford, that will be low maintenance, easy to rent out while you are away and with the possibility of capital gains. When you find that deal BUY.
STEP THREE – aggressively pay down the mortgage
You want to pay this first house down enough so that while you are away tenants will cover your costs for you (including property management fees) so that you don’t have to worry about it. Choose a mortgage with terms that allow you to pay down the mortgage without penalty. Get in flatmates to help you pay it down quickly or, if it proves better financially, just rent the whole house out. When you have paid it down sufficiently then head off on your OE.
STEP FOUR – earn while you travel
This will put you in a great position for when you return. It’s more than possible to work from anywhere in the world today if you choose the right job. Examples include teaching English online, freelance journalism, photography, web design, data entry…I’m sure you can think of others. Or if you work a regular job you might choose to head to a higher paying country such as the UK and take advantage of exchange rate benefits. Whatever the case, if you can earn while you are away enjoying your OE and travelling to far flung destinations you will be able to hit the ground running when you return to your property investing back home. But while you are away don’t be a passive investor – keep in touch with what’s happening in the market with APIA TV so that you can stay ahead of the game.
STEP FIVE – come home
When you return home your mortgage will have been paying down nicely for you while you are away, the market could have gone up depending on the duration of your trip giving you some nice capital gains and you may have even been able to save some money. Now it’s time to buy your second investment property and be thankful that you started before you went on your OE and are not now struggling to enter the market for the first time or, worse yet, shut out of the market forever, like some of your mates.