You might have seen our latest video: ‘How to release equity in your home to buy a second property’. We’ve written a couple of blogs on this subject too and one of most common areas of concern for investors who want to pursue this strategy is worrying about not having enough equity to actually get into the property market as an investor. It’s a valid concern. This is Sydney, after all, and property can be expensive.
But … for that very reason, it’s wise to think outside the square.
Or outside the city, so to speak.
When you’re buying an investment property, there are a number of things to consider. Obviously, you want a healthy degree of capital growth, and you want a good rental yield so that you’re not having to prop up the mortgage repayments too much.
You need to consider property maintenance too. And, if you’re buying away from where you live, you want a property that is easy-care for you, and for your tenants.
But the most critical factor is location – because location does play a big factor in resell down the track, but also because to keep your investment property rented, you need it to be in a place where people actually want to live – close to work opportunities, schools, transport and entertainment.
People worry about picking the next ‘property hot spot’. But this is incredibly hard to do unless you have a crystal ball! I believe, that if you just make a sensible (not emotive!) decision based on the four factors above, then you will have chosen well.
It’s also important to consider your property investment as a medium-to-long term investment. The idea of ‘flipping’ a house or ‘cashing in’ on the next yet-to-be-determined super popular suburb is ok for some people with a high tolerance for risk, but they are few and far between!
And while there is a lot of media talk about property slowdowns and cooldowns and market tail offs, I believe property is always going to be a solid investment, people will always need somewhere to live, particularly as Australia’s population continues to grow.
The market will undoubtedly go through peaks and troughs, and these are not always easy to predict, but if you buy within your means, and work through the numbers across a range of scenarios (including an exit strategy so you know you have one if you need it) then, over time, property will provide you with a good return. And we’re happy to help you get started.