Buying a property for your child

Today, I want to address the number one question I get from parents nowadays: How can I help my child buy a property down the track?

They often ask me, "Should I buy an investment property, rent it out, and maybe my child can live in it in ten or fifteen years?"

Buying a property for your child

Many parents think about buying an investment property, renting it out, and then passing it on to their children later. While this might seem like a sound strategy, there are some potential issues to consider:

1. Future Uncertainties:

   • You don't know where your children will choose to live.

   • Their plans may change due to career opportunities, marriage, studies, etc.

2. Practicality and Costs:

   • Holding costs associated with the property.

   • Your children might not prefer that specific property.

   • You might relocate, creating complications with the property.

For these reasons, buying a property now might not always be the most practical solution. Instead, we often see our clients providing financial assistance to their children in ways such as:

• Repaying the HECS (Higher Education Contribution Scheme) debt.

• Offering a lump sum towards a deposit.

These standard methods align well with our client's financial plans. When working with our clients, we start by asking:

1. What is your retirement target?

2. How much money do you need to accumulate?

3. How much do you want to set aside for your children's deposit?

For example, the equation might look like $2.5 million in retirement savings and an additional $500k for helping your children buy a house.

Making these decisions requires a wealth of planning and strategy, especially when your children are still young. Please feel free to contact me if you have any questions or would like to discuss potential strategies.

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