I'm not going to go on about Housing in Australia as per all the problems and issues, Lets just say if you google it, you'll find SO many reasons why politicians have failed the people, lined their pockets and go to parties run by their rich friends, so they can get richer at our expense. Builders cutting corners to make themselves richer? these days its just so they can survive (albiet most of them have bloated lifestyles..)
No, This is my current Solution. The probable only actual solutions (and it sux)
Back to Basics
Pre WW1 people got together in their family and built houses for the family, Sure, those were the days of 14 kids, 10 of which survived to be adults, 8 got married and 5 had enough stability to help each other, but the concept stands true.
What to do:
3 Mates, Finishing Highschool, maybe 1 gets a job and 2 are on Austudy at Uni. Come to terms with the current Australian Problem, and decide they will not make it on their own. With their parents support, they need to find a run down old house, the worst on the street, in the worst neighbourhood, the price will be far below average, so all the neighbours will be happy to have their property prices increase because of the reno.
They pool their resources, parents are guarantors, get a loan and start.
The Main earner puts in the bulk for the first few years for the loan, and contractually (for safety) they record all expenses & payments on the house, so if it all goes wrong, they sell and everyone gets their fair share back.
Every weekend, the 3 mates (male/female/mix) renovate the house, improving its worth. Gardening, Plumbing, They do it all themselves to save on costs. The only Issue is, because they don't have any certificates they won't be able to sell it. That's ok. You never make money on a house anyway (see this link to my blog about that)
It takes an average of 3 people part-time 2 years to renovate a house, and $50k average, depending on the worth of the house and the reno required. But, because the uni students are studying we'll add a 3rd year. Austudy assumes $250-$350 a week rent, and the earner devotes $500-$750 a week, so they can pay their likely $800 mortgage and put $500 a week into the house, and if parents help by $5k per family for some larger jobs.
By this time, the Uni students are finishing their certificates and ready to get jobs.
<insert, plausibly, high schoolers are as unlikely to find out or care about this, so we can also assume the process begins now>
Now, with the equity in this cheap house, they can likely get the next loan a lot easier.
House by House, the 3 mates buy a house, move in, renovate it as they go, rent out the pre-renovated houses to help support the cash flow required, especially for the loans.
After 6-8 years, they have 3-4 houses, the first house would have risen in equity 20% at least & have 20% of the loan repaid (by the renter) then 2nd, 3rd and 4th would be in partial paid off.
They are ready to settle back, take the time to have an accountant and lawyer draw up the paperwork to work out each persons equity in the total project, sign over the 3 houses to the 3 mates, keeping the first house as income in their 3-way business.
Here's some key points. None of them want to own the first house, its where most mistakes would have been made as they were learning what to do.
Its probably best, to throw all 3 incomes into the pot, to pay down the houses faster. With account keeping, they'll all know how much they've spend on their own personal lifestyles and knowing their own budgets, what they 'can' spend (probably best they have an offset, and each a credit card with a $1k limit each. Fortnightly the offset pays off the CC, knowing that the accounting ensures each person still owns the equity of what they didn't spend.
Risk: It needs to be understood, until the 4th house has been renovated, no-one owns any specific house, if the whole project comes to an end from personal reasons, the accountant/lawyer takes over, and works out ownership %, to be paid out AFTER all houses are paid off (rental incomes) in 20+ years.
If Done right. 3 30yr olds, each in their own house, with 20% of their own loan being paid from the 1st houses income, they only need to make 80% payments for maybe 16-18 more years.
New houses are built like cardboard, and are as likely to fall over by 2040, the builders long gone, people are going to be in uproar. So doing your own house, and making sure you do it right because you're likely to be living there, you're going to put in 20% more effort and cost to get it right, AND no labour costs (which is 75% of most building costs)
No kid right now is going to be able to put down a 20% deposit these days, it takes 3 incomes to do it, and the prices rise faster than they can save (even 2 incomes don't save fast enough to catch it)
But once you're IN the market and have equity, its easier.
While I am being simplistic, and a little comedic, I want to take the time to recognize that this isn't a joke and Australians are 'battling' a whole new form of harsh Australian climate, the economic climate.
I used to work in Loans and Mortgage finance, and have a math background, so I've got the spreadsheets worked out for the above, which is how I came to my conclusions, but I recognise that the markets change enough that what I've done & written may very well be out of date tomorrow.
Good luck in your endevours.
