Starting with a property but not necessarily a home

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  The Australian dream of owning a home is deeply ingrained into our culture. But like many things in the 21st century this dream is undergoing a shift.

  In the past, people would begin by saving a small deposit for a house, borrowing for the longest possible term knowing they would either pay the house off in the distant future or use it to ‘step up’; buying a property to suit an expanding family. The key to this for many people was compromise. The property was not necessarily in the area they wanted to live or it did not have all the features they wanted but it was affordable.

  Today, many people are making alternative choices. Rather than purchase to live in, they make their first property purchase for investment purposes. This allows them to get a foot into the property market with less compromise than their parents made with their first purchase. It can also take some of the emotion out of property purchase; you are not necessarily looking for a kitchen you like or a backyard in which you can relax.

  Once you are on the property ladder it is much easier to make progress and the property gives you a solid asset.

  Another benefit of starting out with an investment property is the rental income that is being generated by the property. This allows you to service the loan more effectively while your asset is appreciating in value. As well, many of the expenses associated with a rental property, including the interest on the loan, are tax deductable. This allows savings at tax time and perhaps a once a year bonus for something extra.

  As already mentioned property investment shouldn’t involve emotion, it is a head over heart task.

  Things to get your head around

  Investing doesn’t involve looking for a property that you want to live in. When buying an investment property, the focus should be on properties that provide strong rental yield and growth and areas that are showing good property appreciation. Also consider the tenancy rate of the area. Consider amenities in the area, especially public transport, and the proximity to the city.

  Buying an investment property means you will also have to give consideration to the task of landlord. This does not have to be arduous, as a property manager can deal with the day-to-day requirements, effectively being a buffer between you and your tenant. However, you do need to know that you can cover costs if the property becomes vacant for an extended period.

  You also need to be aware of the associated costs of purchasing property. Some of these costs can include: stamp duty, conveyancing fees, legal costs, and pest and building reports. An investment property is likely to be part of a long-term plan, especially if you aim to maximise the return on your investment. It is important therefore to know how starting a family might impact on your ability to make repayments.

  Always get advice

  Investing in property isn’t going to be the best way forward for everyone. It is a great way to get a start into the property market but it does require thought and planning.

  The good thing is that there are always professionals who can help you look at the possibilities, including investment property for sale. Accrue Real Estate can walk you through every step of the property purchase process. The Accrue experience includes introducing clients to property generally not available for public purchase. This provides clients with a non-competitive, less stressful environment that not only saves time but can also help them save money. Accrue Real Estate has helped assist many new and experienced buyers and are ready to help you achieve your property goals as quickly and securely as possible.

  (Image courtesy of Mark Moz/Flickr)