There hasn’t been a better time than now to start looking for your first investment property. Prices are now starting to cool in the once flaming hot market, and there is plenty of opportunities to buy quality assets at great prices. Interest rates are still at record lows and the cooling market is opening up its doors to savvy property investors. As Warren Buffet says, “Be fearful when others are greedy and be greedy when others are fearful.”
If you have been thinking about getting into the property market but you have been sitting on the sidelines waiting for that right moment, then that moment is NOW! If you are market ready, don’t delay any further, as putting off your decision to purchase an investment property could be costing you $1000 a week. For example, if you look at a property for $500,000 and it grows by 10%, then the return in equity is $50,000 per year, or $1000 per week. This is called opportunity cost.
A combination of low interest rates, a more reasonable market, solid rental returns and strong population growth, make for great conditions to be buying up income producing assets. If you are market ready, meaning you qualify for home loan finance, then 2018 will be an ideal time to buy.
Now the majority of people see a cooling market as sign to not invest in property or to sell up. This couldn’t be further than the truth. We want to be buying in a cooling market as this will allow us to purchase property at better prices than in a heated unreasonable market when all assets just keep heading north in value. Prices may decline in the less desirable locations, however if we focus on premium high growth areas, then we will always do well as the demand for those assets will always be there. Long-term we want to focus on high demand markets that will always outstrip the supply of stock.
Now buying property that is median priced, close to city centres and beaches, with strong fundamentals of infrastructure, is important to ensure healthy rental returns and steady capital growth. Buying in blue-chip locations is 80% of the reason why properties grow in value.
Buying your first investment property tips:
Buying property is going to be the biggest financial decision of your life. You want to at least make sure you understand the fundamentals of why, what and where you are going to be investing in. We have never lived in a better time to learn with so much access to information. You can now read books and articles, watch YouTube videos and listen to podcasts in the comfort of your own home. And the best part about it is that it is all free!
2) Be Market Ready
Do you qualify for an investment home loan? Develop a relationship with a property investment savvy mortgage broker rather than a bank manager. Brokers tend to have access to a wider range of finance products that can better suit you as an investor. They can also guide you on a strategy that will best suit you as an individual. They say the best time to buy property is when all your finances are in good order and you have pre-approval to go start looking for your next deal.
3)Invest in Quality Assets
Quality assets are properties that are median priced ($400k – $600K), in blue-chip locations. These affordable types of properties are in high demand of full time professional workers and will never go down in value. This is because these types of properties are near where all the jobs are, transport hubs, cafes and restaurants and major shopping centres. This particular market will keep prices moving upwards meaning rents will always rise which is great for investors.
4) Play the Long Game
Always be thinking long-term when it comes to property investing. It’s always a hot topic to predict when the next boom or when the next crash is, but statistics show that property bought in well located areas performed consistently over the course of 10-20 years. There is no right or wrong time to be investing in quality assets that will always be in demand. Prices might flatten or even come back 5-10% but in the long run, quality property will always perform well.
5) Build a Team
No successful property investor has ever achieved financial freedom on their own. Just like in football, the property business is also a team sport. Along with a killer mortgage broker, you also need a conveyancer or solicitor, an accountant, pest and building inspector, valuer, property manager and a trusted property advisor. These team members will ensure you are staying on track with your goals and making the right decisions for your future.
Similar to building your team, surround yourself with others who have experienced what you are trying to achieve. Learn from their success but also take note of their mistakes and see what you can do differently so you don’t make the same errors. There are plenty of free seminars, workshops and meet ups you can attend in order for you to meet new people taking control of their financial futures. Total emersion in the property investment world will help you learn faster and give you greater confidence to take that first step.