The vast majority of potential Australian Gen Y property investors seems to believe that entering the Australian property market is a largely inaccessible endeavour. The many financial risks associated; a requirement for high-pressure decision-making; and of course the lucrative prices of properties in cities such as Sydney and Melbourne all detract from its appeal. It’s enough to make most of us plunge our heads into generous spreads of avocado on rye and silently admit our resignation to the property investment god’s, right?
For others however, these rather bleak realities of the property market within Australia are only speed humps on the road to real estate riches. Read on to find out how you can kick-start your portfolio with a little help from Gen Y’s property gurus.
Learning everything there is to know about the real estate industry is the first step for property investors that aim to purchase an investment property.
No matter whom you talk to, we guarantee they’ll stress that a sound understanding of all macro and local factors affecting the suitability of a particular property is the key to unlocking your investor potential.
If you take action without being educated, you’re only setting yourself up to fail. Attend seminars, watch YouTube videos, listen to podcasts and most importantly; talk with investors that have real world experience. Learning the ins and outs of the real estate market will provide you with a leg up on your journey towards becoming a successful investor.
This approach shouldn’t end with the first property you purchase though. The real estate industry is dynamic meaning there’s always something new to discover or learn – make sure you’re informed of all changes to tax laws, zoning regulations etc. as they apply to you.
As all millennial property investors will tell you, one of the most important things to consider is, “Do you have a plan”?
There are so many finite details to ruminate on when buying an investment property in Australia, and it can be easy to overlook vital details about the home or apartment in question. In order to protect yourself from the many pitfalls that plague first time investors, you need to plan everything, and we mean EVERYTHING. This includes, but isn’t limited to:
Strategising your approach also means that if you miss out on the ideal property or encounter a hiccup with finance, you won’t feel defeated and give up. With a plan in place you’ll find it much easier to dust yourself off and move on to the next investment candidate.
Once you’ve educated yourself and developed an airtight property investment strategy, it’s time to hunt down the ideal starter.
We’d all love to buy a home or apartment in a relatively affluent neighbourhood that shows considerable capital growth potential with minimal ongoing maintenance costs involved. Unfortunately, this is an unrealistic expectation to carry with you into the property investment arena.
The consensus amongst all Gen Y investors is that starting small and building your portfolio from there is the best way to go. Why’s this you ask? Essentially an affordable property in a bread and butter neighbour requires less outlay, which equates to less risk and a more expansive market to sell or rent to. Starting off with a manageable investment means all mistakes will be mitigated and containable. Oh, and before you place an offer or thrust your bidding card high into the sky, make sure you’re not rushing or being bullied into making a decision that doesn’t meet your criteria.
Negotiating with an agent or attending an auction can unnerve even the savviest of investors, not to mention someone that has no prior experience.
What matters most though is that you’ve done your research (Step 1) and understand the sales, growth and rental history of the suburb the property is located in (Step 2). This will give you the confidence you need come crunch time to offer what you think it’s worth. Remember; buying a home or apartment as an owner-occupier is a largely emotional experience. When it comes to investment properties however, you need to think with your head and not with your heart.
Unless you’re some rare breed of property investment Superman or Wonder Woman, you can’t be in all places at once. Here’s where a property manager comes in handy.
By contracting the services of a reliable property manager to be your eyes and your ears, you can free up time that’s better spent trawling real estate portals for additional investment properties, chasing up leads or simply spending time with family or friends.
Finding a property manager that you can trust to lean on when rental disputes arise is invaluable, and well worth the often highly competitive management fee that they charge. In fact, the cost of a property manager is almost negligible all things considered, as it can be claimed as a tax deductible. This step is doubly important if your investment strategy isn’t confined to just one suburb, city or state (and nor should it be).
Short-term pain for long-term gain is the credo that’ll keep your eyes steadfastly fixed on the cookie jar that is, property investment success.
While you may be reluctant to give up those regular skim flat whites every day or the odd weekend away with friends, you need to embrace the sacrifices you’re making and keep a little perspective.
This is no easy feat, and without a hoop to shoot for most rookie property investors will give up at the first sign of trouble. Have a good work ethic, stick to the plan and keep moving forward towards your goals. With the right attitude you’ll be on top of the property investment ladder quick than you can say Warren Buffett.