First Home Buyer's e-Course

Module 3: Set your property goals

You've probably heard the saying, "If you fail to plan, you plan to fail". Or maybe you've heard its close cousin: "a goal without a plan is just a dream". Whatever the phrase, the point is this: If you want to really move the needle on your dream to buy a property, you have to set some really specific goals, timelines and criteria.

In this module, we're going to work through 5 steps to help you get a clear idea of:

  • Price: The price range you're shopping in
  • Type: The type of property you want to buy
  • Location: Your top 5 suburbs to search
  • Features: Which features are absolutely non-negotiable
  • Bonus: Which ones are on your "nice to have" list?

In other words, you'll have a really clear property goal.

This will help you go from "I wish I could buy my first home…" to "This is exactly what I'm looking for – and this is how I'm going to go and get it."

Last week, we had to get the foundations of your situation set up right. Now, let's talk real estate and get you set up with some specific, actionable goals.

Step 1: Price – What price range are you shopping in?

Figuring out what you can afford to buy (and where) can be overwhelming. By getting focused on what you can realistically afford, you can anchor your dreams of owning a property to realistic facts and figures.

This step is pretty straightforward: you simply use a borrowing power calculator to work out how much you can afford to borrow, based on your income and expenses.

Our calculator gives you a rough idea of how much you may be eligible to borrow for your home loan. Just enter a few details about your income, debts and expenses, and we'll give you an estimate.

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If you don't already have a budget, create one: this is going to give you a good idea of how much your life costs, so you can get a more accurate estimate of how much a bank is going to be willing to lend you.

Use one of these budgeting apps to get on top of your money

Step 2: What type of property do you want to buy?

Apartment, unit, villa, townhouse, duplex, loft, freestanding house, off-the-plan property or established home: these are your options when you want to buy a home. No wonder you're overwhelmed!

Now, the property type you decide on here is going to be largely dictated by where you live and where you want to buy. We spoke to a number of different home buyers, where location played a crucial role in what they could afford.

For Rich and his wife, they had their heart set on a townhouse with a small yard, so they decided to move from Sydney to Melbourne, where their budget stretched a little further.

Meanwhile, marketing professional Samuel decided to go regional, leaving Sydney behind for a new start in Coffs Harbour. He has a budget of around half a million dollars, which will buy him a much bigger space than he could afford in the Harbour City.

Read more about Rich's first home buyer journey, and Samuel's experience of leaving Sydney to buy his first home

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To work out the property type you're aiming to buy, do a bit of recon. Plug the details of your ideal city or suburb (eg Sydney, Port Macquarie, Cairns, Subiaco) into RealEstate.com.au (make sure you click "include surrounding suburbs") and have a look at what price points come up.

Are you dipping your toe in a suburb where houses routinely sell over $1 million? If so, now you know you need to look at apartments instead. Or, can you see a pattern where 3-bedroom homes are expensive but 2-bedroom properties are more reasonable?

Spend a few weeks researching the market, until you have a really clear idea of what types of properties fall into your "affordable" list.

Step 3: Location – Your top 5 suburbs to search

Remember when we suggested you click "include surrounding suburbs" when you search on RealEstate.com.au? There's a good reason for this: it helps you see all the options available, so you can define the exact suburbs that make it to your shortlist.

When you research the market, it's all about working out what type of property you can afford, based on your income and situation. By working through this module, you're going to get a really clear answer to the question: "Can I afford my top suburb choices, or do I need to look in different areas?"

For example, let's say your dream suburb is Paddington in Sydney's eastern suburbs. Paddington is central, sought after – and expensive. However, slightly more affordable suburbs are nearby, like Kingsford, Kensington and Daceyville. By moving your search to these areas, you might find yourself shopping in a more realistic price point.

Meanwhile, if your chosen area seems well out of reach, what can you do about it? There are options, like:

  • Doing a joint venture with a sibling or friend – your parents may even be willing to co-buy with you as an investment
  • Looking for a home with an extra bedroom you can rent out and get help with the mortgage
  • Becoming a rent-vestor, where you continue renting where you want to live, but buy a property in a more affordable suburb, city or state

Learn one first homebuyer's secret to buying in Sydney's booming property market

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Cull your research locations from a larger area ("all of Sydney" or "all of the eastern suburbs") to 3-5 key, chosen suburbs.

Step 4: Features – Which ones are absolutely non-negotiable?

You've been dreaming about the day when you'll have your own space – one where you can bang holes in the walls to hang paintings, paint the walls a different colour, and tile the splashback bright green if it tickles your fancy.

There are so many fantastic, freeing options that open up to you once you own your home! But as a first home buyer, you have to work out what's REALLY important to you, so you can cultivate a specific list of wants and needs.

Working through this step is going to make property shopping like grocery shopping: it gives you a map that outlines exactly what you're looking for.

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Think carefully about which property features are absolutely essential to your enjoyment of your home. You might include things like:

  • Secure/off-street parking
  • Internal (non-shared) laundry
  • Secure entry to the building
  • Minimum number of bedrooms
  • Within XX distance of public transport

Step 5: Bonus – Which features are "nice to have"?

We included quite a few things on the list above. You know what you didn't see there? A pool. Marble benchtops. A backyard big enough to play cricket in summer.

Sometimes, first home buyers can make the mistake of equating their first home with their dream home. They're (usually) not the same thing.

Think of the first car you ever owned: it was likely to be small, safe, second-hand and suitable. It got you from A to B and it was affordable, right? Over time, as you earned more money and your financial capacity grew, you were able to upgrade.

That's the approach you want to take with your first home. It's likely to be small, safe, second-hand and suitable. It might not have a kitchen from the pages of a glossy magazine, but it's the first step on your personal property ladder – and there are plenty more steps in your future.

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Think of some of the things you'd ideally love in your home, but they're not deal-breakers. This could include things like:

  • A bath that you can sink into at the end of a long day
  • A renovated kitchen
  • A courtyard or outdoor space
  • Full outdoor clothesline

To sum up:

Having gone through this step-by-step process, you should now have quite a clear idea of what kind of property you're looking for, including:

  • The type of property you want to buy – for example, an apartment or townhouse with 2 bedrooms.
  • The price range you're shopping in – this also gives you a really clear idea of the amount of deposit you need to save, for example $600,000-650,000.
  • Your top 5 suburbs to search – having no more than 3-5 suburbs allows you to research and stay on top of these areas, without getting overwhelmed.
  • Which features are absolutely non-negotiable – this is your bottom line. If the property doesn't have this, it's not on your shortlist.
  • Which ones are on your "nice to have" list – these are the bonus features that move a property to the top of your shortlist.

Write all of this down on a sheet of paper and stick it to your fridge; this is now your first home property goal. You could even share the list with real estate agents and tell them, if a home like this comes across their desk, send you the details, pronto!

Now that you know what you want to buy, in next week's module, we'll help you work out how to whip your finances into shape, so you can improve your chances of being approved for a home loan.

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