Top 7 property investing questions answered

Getting started with property investing in Australia can be a tricky space to navigate. When you’re diving into a new topic or expanding your knowledge on it, questions are bound to come up.

So we’ve put together a handy list of some of the top property investing questions and answers from a survey of over 3,600 Australian clients to help you navigate your path in property investing.

Q. Isn’t it a bad time to buy property, will there be a crash?

The headlines ‘property crash’ and ‘bubble’ get thrown around in the media all the time, the news outlets certainly love the attention they get. The truth is though, over the past 50 years the median house price Australia-wide, has only gone down twice: by 3% in 1998 and by 4% in 2011. This was after significant upturn and then recovered back higher not too long after.

Where we are in the property cycle doesn’t matter when you aim for affordability as a part of your investing strategy. Try not to be reactive to the media and do your research when it comes to your timing with buying an investment property.

Q. Does location matter, where should you buy?

Yes, location matters a lot.

One example of how bad it can go when you get a location wrong happened during the peak of the mining boom in a mining town. An investor bought a $1.4 million residential property when the boom ended, as they do, the property was sold for $377,000. A terrible way to start your portfolio.

So, where should you buy then? You want to look for locations with long-term sustained price growth, population growth, and employment growth. This type of data is easily available for free from the Australian Bureau of Statistics. Also, don’t be afraid to speak to locals who know the locations you narrow down to invest in. Speaking with real estate agents and keeping up with the local council’s plans for the city can help you get a good picture of what type of growth is happening and help you better to help determine where to invest.

Q. Should I buy units?

Land appreciates, buildings depreciate. It comes down to supply and demand, as famously said by Mark Twain: “Buy land, they’re not making it anymore.” House and land offer the commodity of land that units just don’t offer. Our recommendation is to stick to property with the highest possible land content where your budget and investing situation allows it.

Q. What if we don’t have enough money to invest in property?

Any good real wealth-building strategies should encourage you to start small, so, you don’t need a lot of money to get started. You only need a combined annual gross income of $100,000 and some cash for a deposit, or equity in your own home or other property to get started. If you’re worried about stretching your budget too far by buying a property for investment purposes, we recommend you touch base with a financial advisor who can help review your current position as a whole and determine your suitability.

Q. We bought our home, how different could it be?

One of the great things about property investing is how many people already have some sort of experience in the industry, especially if they have their own homes. It’s also a HUGE downside though, as the emotional decisions made when buying a home to live in are terrible when making investment decisions.

You need to take the emotion out of it and have a strategy to your approach, asking questions like “What type of property will give me the highest capital growth?”, “What location meets the criteria to give me the highest capital growth?”. Having a strategy that puts the financial side first over any emotional feelings will help you to make a more successful investment purchase first time around.

Q. Isn’t it bad to get into huge debt with properties?

Without debt, you don’t get the massive leverage property investing offers. Property generates income, so, providing you follow the strategy to offset the costs of the property by optimising the property income and utilise the tax benefits the debt will create more wealth then it costs. Then if you also ensure you aim for affordability with your investment, should anything major go wrong you will be in a good position to handle it.

Q. Isn’t building wealth for money sharks / geniuses / greedy?

It is certainly how movies and media portray wealth. It is just not the truth though, wealth is about having your desired quality of a comfortable lifestyle, providing for your family, and having the freedom of choice. If you think only money sharks, geniuses, and the greedy deserve that then it is time you challenged your thinking. Building wealth through property investing is a proven strategy and with the right approach, can set your financial future on a successful path for life.

Next steps.

The next step is to take action! You can contact us any time with questions you have, and take advantage of complimentary personal support and guidance on your journey to create wealth with property. If this interests you click here to take the next step now or post a comment below or connect with us on our Facebook page.