18 May, 2022 / Category: Blog
Despite the rising interest rates and general market commentary, rents in Melbourne across houses and units are growing. Rising interest rates and lower confidence levels mean less competition in the market for buying investment properties. Making now an opportune time to negotiate a good deal.
According to the Domain Rental Report for March 2022, house rents have increased 1.1% over the last quarter, and unit rents have increased 4% during the same period. Most regional areas, including Central Victoria, have seen strong rental growth, with some regions seeing annual rental growth above15%.
Combine this with the return of domestic migrants, international migrants and international students, and the demand for A-grade rental properties is likely to continue to increase.
Some buyers think they know everything about property. You can sometimes get away with limited knowledge in a booming market because everything is going up. However, in a flat or downward market, you need particular expertise and tactics to buy well.
The Statement of Information is a good first point of call. However, it is often inaccurate and can’t be relied upon to give you an accurate understanding of what the property is worth.
From finance to rent and re-sale, it’s imperative that you understand what the property is worth today and in the long term to ensure it aligns with your investment needs and criteria.
Property is not a short term investment. Unlike the stock market, you can’t easily trade property daily, and making a mistake can be very costly to rectify. Therefore, you need a long-term investment plan. This plan should consider if you are looking predominantly for long term capital growth, good rental return or a bit of both? Are you looking to keep the property forever? Would you like to move into it one day? Or is it a stepping stone to a more significant investment down the track?
These decisions will impact which locations you should look at and which property types you should buy. Having a game plan is essential for maximising your personal and financial return on your investment.
Not all properties or areas are equal when it comes to investment returns. Some suburbs have proven historical capital growth, and others have strong rental demand. Regional areas also offer exceptional investment opportunities, especially for entry-level price points. However, you need to understand the area, the street, and the property, which can only be sought by engaging a resident expert. You need to be clear on the type of investment you are after before deciding on the area to buy in.
Furthermore, some areas might be A-Grade, but this doesn’t mean that every property in the area is A-Grade. We have seen examples where people have bought apartments in thriving locations like St Kilda, Elwood and South Yarra and ended up losing money on their investment because they overpaid for an average property.
You can’t take back bad property choices. You need to make informed decisions from the outset.
Investing in property can be a great way to grow assets as part of a wealth creation strategy. However, before you embark on the property investment journey, it’s crucial to understand how best to manage your finances to maximise your return on investment.
Understanding negative gearing and if this is right for you is an excellent place to start. You will also need to understand the costs of owning an investment property, such as interest repayments, maintenance, insurance and property management fees. Setting up a clear budget for your investment property and understanding any shortfall will ensure you are set up for long-term success. To find out more about the costs of renting out an investment property, contact our property management team or read our blog on property management.
Property advisors, like Infolio, can assist you in ensuring you buy the correct type of investment at the right price. This is especially important in a softer market, where not all areas or properties are equal.
Infolio has an in-depth understanding and experience of buying quality property at a reasonable price. Our Property Management expertise further enhances this, allowing us to advise on capital growth and rental income.
In addition, Infolio will assist you in engaging building inspectors and understanding what maintenance work needs to be completed on a given property before purchasing it.
If you want to secure a quality investment property in less time with better terms and for a competitive price, contact us today for a free 15-minute discovery session to find out how we can help you buy your first or your next investment property, or click here to tell us what you are looking for.