In a national property market that appears to defy all common sense, first-time investors are looking for some guidance before they take that first step. Residential property prices are at an all-time high, and interest rates are also at an all-time low. Understandably they are torn between the two extremes.
Do they take advantage of low interest rates and buy now at top prices? Do they wait to see if the market drops and take the risk that prices won’t climb higher, pricing them out of the market? What if they buy now and current market prices take a massive dive? They are then locked into a huge mortgage on a property that has lost significant value. How will that affect their overall financial position?
There is so much conflicting advice, and past property booms and busts have shown that even the experts can get it wrong. However, many successful investors believe that, just like any other important undertaking, planning is the secret to negotiating the property market and its quirks and variances.
Most investors already in the market started their investment plan by looking for a property that offered capital gain. The rental income paid most of the mortgage, and the expenses generated by the investment were claimed as a tax deduction. Their plan was to wait for the market to rise, thus creating equity. When there was enough equity in the property to cover another mortgage, they purchased another investment property.
The capital growth part of the plan allowed many people to build sizeable property portfolios, but for those looking further to significantly increase their cash flow the next step was to invest in commercial and industrial properties that offered lower capital growth but higher cash flow.
None of this is really a secret, but rather a considered strategy depending on the needs and goals of the individual investor. The most important part of the plan is to select the right type of property. This involves careful investigation of the properties on the market, and most importantly, their location. All this is time consuming, especially for the investor who is starting out and still needs to work to pay the bills.
This is why the best part of the plan for an investor is to find a real estate company whose sales representatives know the market. Here at Bunbury Real Estate, our professional sales agents have many years of experience at finding suitable properties, negotiating sales contracts, and assisting our long-term clients to build their property portfolios. Contact us if this could be you.