May 25, 2015
With interest rates sitting at all-time lows and property prices climbing fairly steadily month on month, the market is prime for investors.
Over the last 12 months property prices have grown by 7.9% across the combined capital cities. Sydney continues to be the standout performer, with property values climbing in the capital city by more than 14% over the last 12 months.
This level of growth is undoubtedly attractive to investors, which is why an increasing number of Australians from all demographics are choosing to invest their money in property.
Over the last few decades, property has proven itself to be a very lucrative investment, especially in Sydney, with prices doubling (on average) every 10 years.
Of course, with the Sydney median dwelling price sitting at $752,000, it can be very hard for potential investors, especially first timers, to save the deposit needed to secure finance and buy an investment property.
So what can investors, especially those under the age of 30, do to secure themselves an investment property?
Consider a shared investment
If you can’t afford to buy an investment property on your own, it may be worth asking family members whether or not they are interested in becoming property investors.
If you buy with a family member you will be able to pool all your resources to become investment property owners without taking on more debt than you can handle. Many investors also find they are able to qualify for lower interest payments on a mortgage when using this technique.
However, it's important for young investors to cover themselves when making a joint investment. A contract should be written up to outline the rights and responsibilities of each party in regards to the investment. This will help to protect both parties in the event that the relationship sours.
Own while renting
Many young people are discovering that the key to being a successful landlord is also being a tenant at the same time. You might not have the money to purchase both a personal property and an investment property. Investment properties yield income in the present while also allowing you to secure a substantial asset for the future.
Remember that you're not necessarily going to be a tenant forever. You're young, and your financial resources are probably limited. Investing in real estate now could even be your ticket to saving for a deposit on your first personal property purchase in the future.
Keep risk under control
Property investment involves some level of risk, but you have the opportunity to keep this risk to a minimum by properly planning your purchase. One way to keep risk under control when you're purchasing an investment property is by purchasing in a popular area. Some new landlords find that they're unable to rent out a home or apartment because of high crime or a lack of nearby amenities, so it's best to buy a building that is in the middle of everything.
Another way to keep risk under control is by researching popular rental properties in your area. You may find that apartments are more popular with renters than houses, semis or villas, as such, it may pay to purchase this type of property.
While many younger Australians have the opportunity to set themselves up for the future by investing in real estate, purchasing an investment property is a decision that takes careful planning. You may have to think outside of the box to enjoy a high return on your investment.
Contact either Owun, Suzanne or Costa on 02 9517 1818 or firstname.lastname@example.org to discuss your options. Or, if you feel like dropping in at our office, we are located at Suite 106, Flourmill Studios, 3 Gladstone Street, Newtown 2042. Be sure to share our blog on Facebook and Twitter and let others join the conversation!