From Tenant to Homeowner: Emma’s Story

From Tenant to Homeowner: Emma’s Story

Being a tenant is great. If something breaks down, the cost and responsibility lies with your landlord. You’re not tied down, and you can move somewhere bigger/smaller/cheaper/plusher in line with your income and lifestyle – it’s ideal! The only downside is: you’re living in someone else’s property. You’re paying down their mortgage, and ultimately, the landlord calls the shots.

When tenant Emma Edwards landed her dream rental apartment on St Kilda Road –  complete with gym, pool and roof terrace – she pictured herself staying put for some time. That was, until her landlord decided to sell. When an owner-occupier snapped up the bargain apartment, Emma and her partner had to make a decision: find another rental or get serious and buy a place of their own. Here’s Emma’s story of her journey from tenant to homeowner.

What made you decide it was time to buy a place of your own?

My partner and I had been living in our dream apartment on St Kilda Road, we’d had the most glorious summer with the pool and roof terrace at our disposal. Then our landlord decided to sell the property, but we expected another investor to buy it, so we didn’t anticipate moving. We’d made it known that we loved the apartment and would sign another lease, but it ended up being purchased by an owner-occupier. It was gutting, but it made us realise that it was time to get serious and get a place of our own. We were 25 at the time. I’d been renting in the UK since I was 18, and we’d been renting together in Melbourne for 2 years. We totted up how much we’d spent in rental expenses over the years and did a little silent cry. It was time to put that money to good use.

How did you begin that process?

We came up with a savings plan and asked my partner’s parents if we could live with them for a while to speed things up. Thankfully they welcomed us with open arms, and we paid a small amount of rent to them each week and stashed the rest. We were both saving about 75% of our weekly income, so the savings added up pretty quickly.

How long was it between deciding to buy and actually purchasing?

About a year, actually, though we were only really seriously ready to buy for about 4 or 5 months. We decided we’d start saving to buy in the November of 2016, and we purchased on September 23rd 2017.

Was it as you expected?

Absolutely not! It was much more complicated and emotionally draining than I’d expected. I’m from the UK and I’m on a de facto partner visa. I’ll eventually get my Permanent Residency, but for now I’m still a temporary resident. That meant we ran into a few hiccoughs along the way. The home loan part was a lot more difficult than I expected and well, you only have to look at the market over the past year to see why the property purchase was a rollercoaster in itself.

We originally started looking for a 2 bedroom unit. Our broker said we could expect to get pre-approval for a property worth up to $450,000, but we soon realised that amount wasn’t going to get us a 2 bedder in the south-eastern suburbs! It was at that point we turned our attention to 1 bedroom apartments. You really do have to lower your expectations, especially when the realities of the market hit you smack in the face. We had to change our strategy pretty dramatically. We’d initially planned to buy somewhere that we could be in for some time, perhaps even have our first child in. But instead we ended up buying a place that we’d live in for a little while, and then hang onto as an investment.

What was your highlight?

Of course it had to be winning the auction. It was one of the few vicious ones we’d been to – and trust me, we’d been to a lot! Credit where credit is due, my partner knew the market like the back of his hand. I do freelance work in the evenings and at weekends, so a lot of the time he would be next to me researching while I was writing. He had spreadsheet after spreadsheet, graph after graph. Even with all that research, nothing could have prepared us for the auction experience.

How would you describe the auction experience?

Crazy! I cried at the end, and I’d been so panicked and stressed I had a dreadful blood nose! Our auction had about 6 or 7 bidding parties, and bids spanned $113,000. We went past our limit, maximum limit and absolute maximum limit because we just couldn’t face losing again. We’ve doubted the decision a few times since then, but overall we know we did the right thing.

What was the aspect of home buying that surprised you the most?

The complexities of getting the home loan, and how blind you are once you win the auction. The home loan process was long for us – largely because of the temporary resident thing, and because the banks were a bit difficult. We ran into more problems than I ever expected, even though we had a hefty deposit and a solid dual income. Even after we purchased the property, we realised that our pre-approval was barely worth the paper it was written on! A tiny policy change between the pre-approval date and the purchase date meant we had to fork out an extra $10k upfront.

In terms of the post-auction period, it was a real blind navigation from both of us. Luckily our broker was really supportive, and our conveyancer helped us with the legal stuff. There’s so much to prepare you for actually making the purchase, but nobody talks about the bit between buying and settling. We had a 60 day settlement, and we only got everything wrapped up 11 days before that. Beware of short settlements!

So, what’s next for you in your property journey?

We’ve got the taste for it now! Now that we’ve got this apartment, we’ll move in and live there very happily, but we are hungry for more. As the market forced us to buy a more ‘investment’ style property than a forever home, we’re keen to buy another in the next few years to add to our portfolio. Having been tenants ourselves, we’re excited to eventually present our property to the leasing market. We’re both very dedicated to taking good care of the property and our future tenants, so we’re making gradual improvements to make it a great rental property for the future.

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