Buying Investment Properties Under $500,000
Are you thinking of buying your first investment property? In most capital cities of Australia there are still a plentiful supply of properties for sale under $500,000.
These capital cities include Brisbane, Perth, Adelaide and Hobart, as well as major regional centers such as the Gold Coast, Queensland.
If you’re a first-time investor, think about taking a conservative approach to your property investment purchase and focus on buying an investment property for under $500,000.
Many first-time investors over-expose themselves financially by purchasing an expensive investment property which can limit your ability to buy multiple properties. This is particularly the case if you purchase an expensive property in the wrong location, potentially resulting in a financial loss.
In contrast, buying a lower-priced property that has the potential for strong capital growth can be an important building block to establishing your successful property portfolio.
Properties prices below $500,000 also tend to have higher rental returns which is important during a climate of rising interest rates.
If you’re ready to invest, consider the below factors:
- Spend time researching all aspects of the property market before even looking for an investment property. Issues, such as negative or positive gearing, rental returns and depreciation should be considered by a first-time property investor;
- Past trends in property values are generally an indication of future trends and it is wise to examine the long-term capital growth rates of the suburb. Unsure on where to get this information? Get in touch with your local sales specialist.
- Take a broad approach to buying an investment property. It is common for first-time property investors to buy a property in the local neighbourhood because they are familiar with the area. By taking a narrow approach to the location of the investment property, you could severely limit their options as a first-time investor;
- Try to target suburbs in lower-priced areas which have a higher number of properties for sale;
- When you have selected a suburb, don’t make an emotional decision when choosing a specific home. Remember, as an investor, you don’t have to live in the property you purchase. The investment property you choose to buy must appeal to the tenant who will be paying the rent;
- Check out any development changes proposed for the suburb. Many local governments are undertaking reviews of zoning which could have a major impact on property values. For example, a property that was purchased for a single residential use and rezoned by the local council as a triplex site will increase substantially in value. The planning department of a local government can advise you of any proposed zoning changes;
- Check out any planned infrastructure changes for an area you are interested in buying. For example, an upgrade of a local shopping center or plans for a new railway station can have a major impact on local property values;
- Make sure that there are tenants prepared to rent your property. Rental income is a key factor in serving the loan so if you cannot find a tenant, you will have problems keeping the investment property long-term; and
- Check your finances before you consider buying an investment property. If you have pre-approval finance, it will allow you to move more quickly to secure the right investment property. Coronis Mortgage and Finance can take the stress out of buying your first home by finding you the right home loan, with the right lender, with the right services.