'What are your 3 non-negotiables?' What to ask yourself when you're looking to buy property.

We've all been there.

Browsing realestate.com.au on a Friday night, four pages deep into six-bedroom, five million dollar, waterfront homes in a suburb that we can barely afford to rent, let alone purchase property in.

"Owning a home" is the great Australian dream. But, according to an expert, far too many people are going the wrong way about it.

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This week on Mamamia's money podcast, What the Finance, financial expert Melissa Browne sat down with author and actress, Pallavi Sharda to chat all things property investment.

Whether you're thinking of buying your own home or looking to invest in property for your retirement, Mel answers all the questions you could possibly have on purchasing property. 

Here are some of the top tips we took from this episode.

Find your three non-negotiables

Yes, that means getting rid of your six bedroom, four bathroom, waterfront property with a pool and tennis court search.

Mel suggests finding just three non-negotiables on what you need in your property. 

For her that was one car space and two bedrooms within a three suburb boundary. 

Your non-negotiables might include the number of bedrooms, whether or not there is an outdoor area, where it is located or whether the property is an apartment, townhouse, villa or house.

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Once you have decided on three "non-negotiables", all other considerations are off the table. 

As Mel explains, finding the 'perfect property' with everything you want included will most likely be out of your budget.

"Everything else is off the table," she says. 

Consider "Rent-vesting"

Before you dive right in the deep end of property ownership, aka purchasing a house in your dream (expensive) location, Mel suggests considering rent-vesting.

"Rent-vesting means you choose to rent where you would like to live, and you buy a property, maybe where you would never live, but at an affordable price," Mel explains. 

"We can buy a property, but it doesn't have to be our own home."

By doing this, you can enter the property market with relative ease, and rent out your property to pay off the mortgage at a lower price than you may get for a home in the area you would like to live. 

Once you've paid off your first property, you'll then (hopefully) have a great lump of money to put towards your dream home when the time should come, if that's what your heart so desires!

Be mindful of your mortgage

"What I see far too many people do, is they find out how much they can borrow, they're desperate to get into the market and they overspend," Mel says. 

Rather than taking the bank up on one large loan, Mel suggests borrowing less and using the leftover for other investments. As she calls it: "being a financial tart."

Shop around and don't keep your loyalty to the bank your parents signed you up to as a default.

"That's where a mortgage broker can be great," Mel says. 

"Talk to people who have been there, get a great referral and have those conversations very early on."

Save a 20 per cent deposit

The general rule of thumb for investing in property is to save a 20 per cent deposit for the place you would like to purchase. 

That way, you can avoid Lender's Mortgage Insurance, which can increase the price of your property by more than $10,000.

While it sounds like a no-brainer, Mel explains that there are some pros to making a smaller deposit though. 

"If this is a long-term investment, and particularly if you are a money type that is amazing at paying down debt but terrible at saving, then I am not necessarily against paying that mortgage insurance."

Its benefit being you can pay a smaller deposit and enter the market quicker. 

If you'd prefer to avoid LMI altogether though, another alternative is receiving parental guarantee.

"If you have parents that have equity in their own home and if they're willing to share some of that equity with you, then that can be a way where you have 10% deposit and they use 10 per cent of their home, and you avoid mortgage insurance that way."

Ultimately, Mel suggests considering your money type when making the decision, and speaking to a mortgage broker as soon as you begin considering property investment.

For even more information on buying property, listen to the full podcast here, or read our other money articles below.

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Feature Image: Getty.