Anyone with an eye to building wealth through property investment might want to start planning now, before improving conditions for real estate investors spark a potential rush.
Source: Anthony Keane, news.com
Property investment is getting sexy again, thanks to record low mortgage interest rates and rising house prices in most states.
Real estate specialists say investment conditions for first-time landlords are improving, but warn that investors need a solid plan before sticking their foot in the door.
Prime Property Strategies director Sasha Holland said FOMO – fear of missing out – was developing in some states as home prices rose amid “very, very low interest rates” and this could lead to an investment frenzy.
Ms Holland said getting your finances sorted was the first step to investing in property, and people shouldn’t assume they couldn’t afford it.
“There are many ways that you can finance an investment property, whether you have your own business, you are a part-time employee or using a guarantor,” she said.
Dipping into their own home’s equity is the most common way for real estate investors to finance their first rental property, and often means they spend very little of their own cash on the purchase.
Would-be investors should set clear goals, and discuss their plans with their loved ones, Ms Holland said.
“Investors can find themselves in a state of analysis paralysis because there are so many investment options to choose from and they don’t have a clear idea of the type of investment they want or need to achieve their goals,” she said.
Binnari Property managing director David Hancock said new investors should understand there were “markets within markets” in Australian property that moved in cycles.
He said while buying in your own suburb or city could be prudent because you understood the area, this strategy might not always work.
“If the market they understand well happens to have already been through a period of growth, it may be quite stagnant for the next five-to-seven years,” Mr Hancock said.
He said potential investors should do plenty of research, understand what the locals were buying, and seek help from a property professional.
Building a team you can trust – mortgage broker, solicitor, accountant, property investment specialist – was vital, Mr Hancock said.
“Have professionals around you who have been through the process,” he said.
“Once you have done it once, it becomes easier.