How to climb the property ladder - now

By Sarah Megginson | 30 Jul 2019

THERE’S ONLY one constant when it comes to real estate investing – and that is, there is no constant.

Everything changes; it is the nature of the beast. Market cycles evolve. External factors shift. Economies grow and contract, finance markets respond to various pressures, interest rates move up and down, and, in the midst of it all, property investors strive to navigate the challenges of change to ultimately make a profit.

Now more than ever it’s essential for investors to adopt a long-term view of their property plans. We enjoyed phenomenal growth in Sydney and Melbourne in the last half-decade, but that time is behind us.

So the next question is: how do we move forward in 2019? How can we continue to invest and grow our portfolios, to set the foundation for lasting wealth – without taking big risks along the way?

There are solid arguments for and against both houses and units as investment classes, and the right decision boils down to your strategy, your budget and your goals

Step 1: Ensure you can finance the purchase

With the mortgage market shifting at breakneck speed, it’s essential that you work with a finance broker or bank to ensure you are preapproved for a loan before you go property shopping.

Keep in mind that real estate is an expensive investment, and entry and exit costs are high. As well as the deposit and stamp duty, you need to allow for legal costs, such as for conveyancing, and building, strata and pest inspection costs – this can all add up to several thousand dollars. Lender’s mortgage insurance is another amount to budget for, along with a depreciation report.

You may have to borrow a substantial sum, and the type of loan you require will depend on the size of the mortgage and your own needs. Some investors like interest-only loans or lines of credit, though a principal and interest loan will help you build your own equity in the property more quickly – and may be your only option in the current tough market.

Step 2: Decide on the type of asset you want

Some investors swear black and blue that houses, not units, are the only way to make money in real estate. Tell that to the people who bought apartments in Sydney’s inner city 10 years ago – their $500,000-plus profits tell a different story!

Ultimately, there are solid arguments for and against both property types as investment classes, and the right decision boils down to your strategy, your budget and your goals.

Units are obviously more affordable to buy than houses, which broadens their appeal to investors.

If you are buying a unit, look for features convenient to tenants, like off-street parking, internal laundries, and ready access to public transport.

If you’re buying a house, look in areas where the demand for rental housing is strong, such as where the population is relatively young and there are numerous families with young children. Again, proximity to public transport and major amenities is important.

Step 3: Look for high-quality property assets

The first thing prospective investors need to decide upon is the type of property they want to buy. This means doing thorough research.

As a general rule, the better the location, the better the chances that your property will gain in value over time and attract suitable tenants. So, choose an area where the general quality of properties is good and tenant demand is high.

Proximity to central business districts and major employment centres helps ensure good demand from tenants. Easy access to public transport such as buses, trams and trains is also important (the key is to be near these amenities without being so close as to be impacted by noise or foot traffic).

Areas near hospitals and universities always attract high demand from tenants for rental accommodation. Being close to schools, parks, shopping centres, childcare centres and other community facilities can also add value to your home. The nicer the area and the more convenient it is to live in, the safer your rental investment.

Step 4: Negotiate hard on price

Many areas around Australia have entered the buyers’ market phase; that is to say there are more properties on the market than there are buyers interested in them, so sellers have to be more flexible with their pricing expectations.

This is where research can really benefit you. If you know that similar properties in the area have been selling for around the $700,000 mark, for example, and the asking price is $720,000, but you also have evidence that property values in this particular market are slipping, then there is nothing to stop you from making a lower offer that reflects those market conditions. Your first offer is only a starting point, and you never know the situation of the vendor; they may just accept your low-ball offer if they’re desperate to move on.

Step 5: Attract the right tenants

Before you commit yourself to a property, you need to check whether you will be able to find a suitable tenant who will help you repay your mortgage. Check out the Top Suburbs section on Your Investment Property‘s website for the latest data on vacancy rates, tenant demographics and more.

Aim to buy in attractive locations where other people want to live as tenants or owner-occupiers, such as inner-metropolitan suburbs close to plenty of amenities, public transport and jobs.

It’s also a good idea to talk to local property managers, as they can give you an indication of tenant demand in the area. No matter where you buy, remember to ask yourself whether there is good access to transport, education, health, community facilities, entertainment and adequate parking, as these are key selling points for buyers and renters.

Your first offer is only a starting point, and you never know the situation of the vendor; they may just accept your low-ball offer


- Desposit
This could require anything from 5% to 20% of the purchase price, and many banks now want to see evidence of ‘genuine savings’.

Lenders mortgage insurance is payable if your deposit is less than 20%; this is a premium that insures the lender, not the borrower.

- Stamp Duty
A levy funded by the state government when you purchase a property, this is generally 1–4% of the purchase price.

- Legals
Conveyancing, which legally handles the transfer of the property into your name, costs up to $2,000.

- Other
Other expenses might include building and best inspections, buyer’s agent’s fees, and council rates upon settlement.


Top Suburbs : marrickville , gladesville , midland , geelong west , artarmon


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