If you are sitting on a tidy amount of equity in your current home or…
How to buy your first investment property
What goes up, must crash back down to earth… it might be true for gravity, but not, it seems, for the housing market. Yes the boom phase is over, but new figures show that rather than continuing to fall, house prices are set to pick up.
March prices were down month-on-month by just 0.3% in Sydney, 0.2% in Melbourne and 0.1% in Brisbane, according to business analysts CoreLogic. And over at the ANZ, economists are forecasting growth this year of 1.8%, rising to 3.6% in 2019.
While this is bad news for speculators looking to make a quick buck, it’s good news for long-term investors. Yes, tighter lending restrictions are in place but, if you do your homework, it’s a perfect time to buy your first investment property:
- The heat has left the market and prices are at the lowest point of the cycle
- Population numbers in the east-coast capitals are surging, driving the rental market: Sydney and Brisbane each have a growth rate of 2%, while Melbourne’s is at 2.7%
- The Reserve Bank looks set to keep interest rates at their current lows until at least 2020
But before making any major financial decisions, it’s essential to:
Do your research
Houses in desirable areas will always be in hot demand and, as a result, carry a premium price. That’s why people have being snapping up cheaper new apartments. But they come with a caveat.
The glut of new builds has led to a rise in unscrupulous spruikers. Companies selling the properties on behalf of developers often market themselves as property investment companies, pushing lower quality units at premium prices.
That’s why it’s essential to do your due diligence. Ask local real estate agents for their opinions on values and rental prices. Never rely on solely one source of information.
Have a plan
Before you start, define your investment goal, timeframe and what you hope to achieve along the way. Why are you investing? Is it for your retirement or your children’s education? Are you looking for long-term rental returns, and are you aware of a landlord’s responsibilities? Also, do you have an exit strategy? Without a clear view of your objectives, you won’t be able to plan ahead.
Do your sums
Lending standards are tight, that’s why it’s essential to talk to an expert mortgage-broking professional, one with access to a range of products from first- and second-tier lenders.
At Zippy Financial, we’ve a team of experts who can match you with the right loan, helping you take your first step towards property investment and a more secure financial future.
Louisa Sanghera is a Finance Broker for Residential Mortgages, Vehicle and Asset Finance, Commercial Lending and Budgeting and Cashflow Coaching with Zippy Financial.
She has gained more than 30 years in the Banking and Finance Industry, and since founding Zippy Financial, has become a multi award nominated expert in the field of finance featuring regularly in industry press and speaking at finance and investment seminars across the country.