When interest rates are high and there is some uncertainty in the economy, it’s important to not be paralysed into inaction if you want to invest in property. If you’re waiting for the perfect conditions for investing, you may be waiting forever – unless you have a crystal ball.
The key is to gather information about the location, the market, the actual property, your lending options, your financial position and your investing goals.
So let’s break this down into a few key pointers for savvy investors:
- Invest in low risk areas – and by this I mean and area that has low vacancy and high demand, good prospect for capital growth and population growth and, importantly, isn’t dominated by one particular thing – such as an industry like mining, or a demographic like students – the broader the net you can cast to secure tenants, the better.
- Invest for the market, not your ego. We’d all love to be able to say we’d just bought an investment property in some fancy, well to do area, but that isn’t always going to get you the best return on your investment. Personally, I’d be more impressed at the entry price, rental yield, low vacancy and capital growth than the address.
- Repay your loan. Many investors opt for an interest only loan rather than principal and interest. Which is great – if that suits your financial position and goals. Don’t just blindly go for the interst only option as it may not be ideal for you. Talk to your broker, financial advisor or accountant. Run the numbers and if you can afford to pay off some principal, do that.
- Invest for the long term. Unless you’re a builder, renovating and flipping houses, we always recommend that you aim to hold the property for the long term. That exact time frame will depend on your own financial goals and strategy.
- Diversify! Don’t put all your eggs in one basket. If you’re going to buy multiple properties, we always suggest you opt for different locations, property types and price points if you can. I have one client who has an apartment in the Sunshine Coast QLD, and they’ve just bought into a newly completed development in Blacktown NSW. They’ve spread their risk over two very different geographical locations and demographics.
If we can help you decide on your next investing move, we’d love to chat.