It is a huge financial decision to invest in a second property to help your kids but the value of your gift can be immeasurable for their future and yours.
It is an incredible time when your children go off and try and create a life for themselves. They might be heading to University, or just wanting to flee the nest. Whatever the reason, if you want to help your kids get a head start, the question is, is it easier to help them buy their first property or should you invest in student accommodation? Hopefully these tips will make your decisions a little easier.
If you want to help with your child's flat accommodation at Uni, consider investing in a student property.
Is buying a student property a good idea?
So, your child has decided to go to University and you want to help them out. You could invest in a student flat for them. This is obviously a huge financial commitment, but after they leave, you could be sitting on a gold mine. If you purchase a student flat, your aim will probably be that your child could live there and you charge them little to no rent.
Of course, if there are other flatmates you can charge them the standard going rate. Future Unlimited released a standard living cost for students in Australia and renting is anywhere between $165 – $440 per week, depending on where they live.
When your child graduates, you can keep up rental income when another student fills their room. Investing in student accommodation can be daunting but the fact is, there will always be students going to University and they will always need accommodation. Buy in the right area, and it will be an investment property that won't be hard to fill with occupants. If you are searching for property near a university in Canberra, then Peter Blackshaw can point you in the right direction.
What are the risks?
The main warning that comes with student accommodation is the tenants. They are students after all, and their lifestyle may be a little different than that of a family of four.
If you are set on investing in student accommodation make sure that there are rules in place to cover any damages. It should be all covered in the tenancy agreement you sign with the tenants. It is important that both the property manager and tenant understand it. Make the rules clear on parties, appropriate utility use and anything that might damage the property. Do your research of the neighbourhood and ask yourself if it will be appropriate to tie your money to that neighbourhood in the years to come.
You can help your kids with their home deposit and also make some money from it in the future.
Helping with a deposit for your child's first home.
Again with the big financial decisions. If it has been your dream to help your kids with their first home then to make the most out of your generous gift, sometimes investing in a property with them can make you a lot of money in the long run.
Mortgage Choice spokeswoman, Jessica Darnbrough says the crucial step in helping your children with a home loan is understanding their financial situation so you can decide the best way to help them. One option is the parents can chime in and make a cash deposit into their child's bank account months before applying for a home loan. With every lender they have different requirements, but the period of time to have that money in the bank is usually between three to six months.
The other option is to invest in the property alongside your child. Although partnership investments do come with their own risks, they can also be rewarding. One of the benefits is that you have a relationship with the investment partner. You will probably know their financial history and therefore you may feel safer with them. To make sure everything is above the line, make sure you document the agreement with your children.
For any advice or help with finding a property for investment, talk to the helpful team at Peter Blackshaw .