As our property market, economy and demographics continue to evolve, the astute investor has to keep up with all of these changes and adjust their strategy to suit.
The good news is, if you’re thinking of making 2020 the year you become a property investor (or the year you grow your portfolio), you’ve got the opportunity to get started on the right foot by taking advantage of market conditions.
But, before you take the plunge into investing in property, here are a few things you should know:
Interest rates are at record lows, which means the cost of holding an investment grade property - you know, the excess of your outgoings compared to your income - will most likely be lowest for many years.
So now is the time to use this to your advantage to pay down debt, refinance for a better deal, and build equity you can use to fund future purchases.
When you’re calculating how much you can afford to repay, don’t count on rates falling again; instead, follow the banks’ lead, and allow a buffer of at least 2% for potential rate rises.
Though unlikely in the next few years, it will happen eventually, so you need to make sure you can service your loan in the future.
The housing boom of the last decade saw property values in many of our capital cities soar out of reach of many Australians, causing some "commentators" to suggest investing in regional areas which are more affordable.
But the long term trends suggest that well over 70% of Australia's immigration led population growth will occur in our 3 big capital cities - Melbourne, Sydney and Brisbane.
And while new regional skilled worker visas are likely to draw more migrants to regional locations for a short while, as soon as their visas expire most immigrants will move to the big smoke.
So don't fight the big trends.
Only invest in the inner and middle ring suburbs of our three big capital cities – that's where the economic growth, jobs growth, population growth and most importantly capital growth of real estate is going to occur.
Record-low interest rates and increased competition among smaller lenders have seen many investors move away from the Big Four banks – and they’re reaping the benefits.
With the big banks criticised for not passing on RBA interest rate cuts in full late last year, and long-term customers beginning to realise they’re often getting a raw deal compared to new signups, it’s become clear that loyalty to your childhood bank is far from the best way to build a property empire.
Shop around those smaller lenders or chat to an experienced mortgage broker about your options, because there are some great deals out there for both investors and owner-occupiers.
Much to Greta Thunberg’s delight, the average Aussie seems to be making a concerted effort to green up their lifestyle – be it by using public transport to get to work, investing in a reusable coffee cup, or blanketing their roof in solar panels.
This eco-friendly trend is set to continue, and it could be good news for investors, as well as the planet.
- Also read:Heat comes out of the housing market as values across Melbourne dip and Sydney slows | Corelogic Home Value Index
- Also read:Latest property price forecasts for 2024 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:Sydney property market forecast for 2024
- Also read:Home Price Growth Still Strong Over November | Latest Housing Market Stats
- Also read:Boom to bust: What makes property prices rise and fall
With government rebates available for home solar power systems, and public transport likely to rise in popularity thanks to road congestion issues and fuel costs, first-time investors should consider looking at apartments close to train stations and bus stops, or luring environmentally conscious tenants with a solar system that will also save them money on their power bills.
Energy efficiency will be another strong selling point with tenants and future buyers alike.
Has Uncle Roger been telling you that you should invest in a mining town in WA again, as though he missed the memo that the mining boom has fizzled?
Of course, your friends and family want you to be happy and successful – but their well-meaning advice isn’t always accurate!
Instead of soliciting opinions over the Sunday lunch table, speak to an independent property strategist for some evidence-based, educated advice.
Don't waste your time asking the local real estate guru or financial planner, they will have their own biases, as will most buyers agents who can only purchase in their preferred location.
I’m talking finance pre-approval, building and pest inspectors at the ready, and local market research.
Sure, it’s not going to get you heart racing like the thrill of bidding at your first auction – but failing to nail these fundamentals could have disastrous consequences.
You don’t want to miss out on the perfect property because you haven’t sent your payslips off to the broker yet, or get stuck with an empty dud because you didn’t look into vacancy rates.
Spend the time printing out bank statements and hunting down the required documents so you’re totally prepared when you find a property you’d like to purchase.
Follow these six steps – and you’ll be well on your way to property investment success.
If you're wondering what will happen to property in 2020–2021 you are not alone.
You can trust the team at Metropole to provide you with direction, guidance and results.
In challenging times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that's what you exactly what you get from the multi award winning team at Metropole.
If you're looking at buying your next home or investment property here's 4 ways we can help you:
- Strategic property advice. - Allow us to build a Strategic Property Plan for you and your family. Planning is bringing the future into the present so you can do something about it now! This will give you direction, results and more certainty. Click here to learn more
- Buyer's agency - As Australia's most trusted buyers’ agents we've been involved in over $3Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective - that's something money just can't buy. We'll help you find your next home or an investment grade property. Click here to learn how we can help you.
- Wealth Advisory - We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
- Property Management - Our stress free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years and our properties lease 10 days faster than the market average.