Buying an investment property feels like a big step, but there are thousands of new investors, young and old, diving in every year, setting themselves up for a better financial future.
“Property as an asset class has performed incredibly well over the past decades,” says Anne Flaherty, economist at realestate.com.au.
“People know prices are going to rise in the future, and they’re attracted to the idea of property.
“So, we’re seeing more and more people getting into property investing.”
The big question is, how does a budding property investor know it’s a good time to start their property portfolio? Here are five tell-tale signs you’re ready to invest.
You’re thinking about your financial future
If you’ve found yourself thinking about retirement and your future finances, that’s a clear indication it’s time to act, says Daniel Hubbard, sales and brand manager of Invest by Metricon.
“For a lot of people, it might be lurking around on the back of their subconscious for years,” he says.
“People are ready, but they don’t know it. Then they sit on it or put it in the too-hard basket.”
Often this results in people starting to invest in their 50s and 60s, or close to retirement when they should have started much earlier, Hubbard explains.
You have equity in your home
It’s a myth that tens of thousands of dollars sitting in your bank account is necessary to start property investing.
“The average investor doesn’t have cash sitting around,” says Hubbard.
“It’s about the under-utilised equity you have in your home. People don’t realise they can tap into that right now and that equity will be a better way of putting cash in.”
You’re open to taking the next step
If you’re feeling well established and wondering how to prepare for your future — that’s a pretty good indication you’re in a position to begin investing.
“People might be thinking ‘how do I do this?’, or they’ve heard about equity, about tax, but they don’t know how to structure it,” Hubbard says.
“One of the biggest things, from my experience, is people need to be receptive to actually getting the information to motivate them. That’s really a huge thing because if you aren’t, there will be trepidation.”
You’ve set financial goals
Are you planning for retirement, looking to start or expand your investment portfolio, or want to pay off your mortgage faster?
Knowing what you want to achieve is critical and will help on the journey, according to Flaherty.
“There are many reasons why you might invest in property,” she says.
“You might just be after capital growth. A lot of people are thinking about how they can generate investment while they’re working. There are also some things to consider, like whether you are going to offset against your income. If you don’t have income, then you might want to make income off a rental to help support your lifestyle.”
Knowing your goals is essential as they will underpin the locations you buy in, the type of property you purchase and your financial structures, she adds.
You’re considering your investment strategy
There is no one-size-fits-all approach to property investing, so keen people may be trying to figure out the best strategy for their circumstances.
Common options to consider include negative gearing, buying and holding established property, buying new rent-ready homes and gearing your portfolio for positive cash flow.
Before committing, it’s wise to get advice, says Flaherty.
“It’s an absolutely enormous financial commitment to purchase an investment property,” she says.
“Even if it can increase the buying costs to hire people, if they can make that process easier, then it could be worth it.”
Hubbard agrees, saying planning ahead can be a complex task for new investors to do independently.
He recommends looking for the right experts to guide you, like Invest by Metricon, created to make property investing easier.
The team offers tailored advice, investment education, insights and location analysis to investors purchasing turnkey property at no additional cost, he adds.
“As Metricon is a home builder — and that’s where it makes its margin — there’s no fees and commissions, which is a huge advantage to an investor,” he says.
All pictures are courtesy of Metricon.