It is no doubt that buying your own home or investing in your first property is a big decision that brings up a lot of questions. “How do I know when I am ready to buy my own home?” or “How much money should I save up before investing in a property?” are just some of the usual questions I am asked from those that are still unsure if they can take on the responsibility. In high-value investments like real estate, it is very important to be financially and mentally ready. Here are the signs and what it means to be R-E-A-D-Y.
1. R-esponsibility: You’ve become a more responsible and independent person.
In the past, especially when you were studying, you were dependent on your parents for everything. But now that you have been working and earning for some time, you have gradually become more responsible and independent – from being able to buy what you want to making some of your own rules and life decisions. It is time to make that next big step towards independence and invest in your own home, a place you can call your own.
2. E-arnings: You’ve demonstrated growth and stability in your career and income.
Look back over the past few years and imagine what your work life was like. I am certain that you would agree that you have progressed greatly since then in terms of income, role and/or rank. As a result of your hard work, you have demonstrated your capability to have a stable and growing career and income.
And the best is yet to come as you are now at the stage where you will experience your peak earning growth years, usually during the late 20s to mid-30s, where there is a rapid increase in salary or income. There is no better time to take advantage of your situation by purchasing your first property.
As I discussed in my previous blog (3 Things You Need to Afford a Property. And It's Not Millions), you don’t need millions to afford a property. All you need is a steady and growing income (capacity) to be able to pay the monthly down payment and the monthly amortization for the bank loan (credit) upon turnover. With pre-selling scheme and generous payment terms offered by the developers nowadays, you don’t need to shell out millions outright to buy a quality property.
3. A-spiration: You continue to aspire for a better life.
Look back on your life. Back then, maybe you had to scrimp and cut some costs or expenses. But today you are able to buy your daily needs and wants without feeling the pinch. You can eat out more often, go on shopping once in a while, and travel to places. You are now fairly comfortable in terms of your standard of living, but you know there is always room to grow.
Now it is time to look toward setting yourself up for the long-term and invest in a property that not only elevates your living experience, but also accelerates your earning potential through capital appreciation.
4. D-iscipline: You’ve practiced strong financial discipline.
Over the years, you have found the importance of not living beyond your means and paying your bills on time to avoid penalties. This has developed your skills in cash flow management by increasing your inflow through hard work while minimizing your outflow through smart and reasonable purchases. As a result, you have been gradually growing your savings as a sort of security blanket or emergency fund, enough to last you 6 month-worth of your expenses.
But maintaining a huge bank account beyond your security/emergency fund is not the smartest financial decision due to inflation. So now that you have built a foundation of managing your finances and saved up enough money as a security blanket, it is time to make your money work harder for you by investing in your first property.
5. Y-es: You say yes to the things that matter even if it scares you.
Being ready doesn’t mean absence of fears and anxieties, particularly in high-value investments like real estate. Fear is a natural reaction, but it is with courage that you decide to take action for as long as you have the right market understanding and you minimize and manage the risks (3 Common Fears in Buying a Property and How to Overcome Them). There’s this saying, “If it excites you and scares you at the same time, it probably means you should do it.”
So, are you ready to buy your own home or invest in a property?
To know which property is right for you based on your specific needs and goals, book a free consultation with me! I will give (1) Property recommendation (2) Earning projections of the properties and (3) End-to-end assistance on how to buy your first property.
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ABOUT THE AUTHOR
Edric Maguan is a successful real estate investor, an experienced and accredited Real Estate Broker of several top developers, and a Certified Public Accountant from University of the Philippines - Diliman. He found his passion in inspiring and empowering people to make the most out of their hard-earned money through real estate investment. Read full biography here.