AS WE reach the end of the year it seems Australia’s property market has been heating up, with greater sentiment, activity and price growth.
The latest CoreLogic figures show the market continued its recovery in November, with prices rising for the second month in a row. Dwelling values rose by 0.8% over November and 0.4% in October, following five months of falls resulting in a total 2.1% drop in values between April and September.
The question is now, what will happen in 2021? Will the market strengthen, or will it resume a downward trajectory when some of the COVID assistance packages come to an end?
All signs point towards growth
CoreLogic’s Head of Research, Tim Lawless, says Australian home values could surpass pre-COVID levels early next year if the current growth rate continues.
Housing values already hit record levels in Brisbane, Adelaide, Hobart and Canberra in November.
While some commentators are still hesitant, many experts believe the price growth we have seen at the end of 2020 is predicted to continue into next year.
Some forecasts for growth rates are more bullish than others, but Hotspotting.com.au founder Terry Ryder predicts a national property boom next year.
He says Australia’s real estate market has “done brilliantly” this year considering COVID-19, and has completely defied earlier forecasts of price falls.
“In March and April, economists and media headlines were telling us to expect a collapse in property prices,” he says.
“Some were forecasting a 15 to 20 per cent fall, and the worst case scenario was a 30 per cent drop, but we haven’t seen that, and I don’t think we were ever going to see that.
“Most locations across Australia have continued to show price growth month by month, with Sydney and Melbourne the exception, but they are often the exception to the national rule.
“Even those markets are now starting to get positive numbers, but most other capital cities and regions have had growth right through.
“I think we’re coming into a national property boom. I think next year is going to be incredibly strong economically and in real estate.
“We’re really going to be having the first genuine nationwide property boom since the start of the century.
The market hasn’t had double digit growth since the start of the 2000s, he says, and in 2017 Sydney and Melbourne were really the only cities to boom.
“But next year we’re going to see all the capital cities and most of the majority regional centres having strong growth,” adds Ryder.
SQM Research is also forecasting strong annual growth of up to 12% in most capital cities next year, with Perth leading the forecast with predicted growth of between 8% and 12%.
Meanwhile many of the banks have backflipped on their doomsday predictions for price falls, and revised their house price forecasts for 2021 upwards.
Westpac, for instance, predicted a 10% fall in prices between April 2020 and June 2021, but is now forecasting a 5% fall, with prices to rise by 15% in the two years from June 2021.
NAB, which predicted falls of between 10% and 15%, is expecting prices to rise by 5% and 6% respectively across the board in 2021 and 2022, while ANZ predicts price rises of around 9% across the capital cities next year, revised upwards from a fall of 10%.
All signs point towards growth
So what’s underpinning Australian real estate prices now and moving forward into 2021?
There are many factors, including a shortage of stock, with the resulting buyer competition for available properties pushing prices up.
“Properties are selling so quickly; what’s available is getting snapped up,” says Ryder. “People are offering strong prices to snap property up in the face of competition.
“It’s a vendor’s market but there are relatively few taking the opportunity, which is one of the factors keeping prices strong, but not the only one.”
Low interest rates is another factor, as well as the economy. Ryder explains that Australia was in and out of recession quickly, and the economy is strong, with unemployment failing to reach the highs predicted, and currently sitting at around 7 per cent.
Many have predicted the market may feel the worst pain when government and lender assistance packages come to an end, but Ryder says that’s not going to come to fruition – if it was going to happen, it would have already, he says.
It’s business as usual in most parts of Australia, notes Ryder, with the majority of the country getting the virus under control very quickly.
People are now confident and spending, and there has been no massive economic hit. In fact, he says some parts of the economy have thrived because of COVID-19 and some property markets were directly pumped up because of it, with some regional economies turbocharged by it.
Recent data has found consumer confidence in Australia has hit a 10-year high, with the most recent Westpac-Melbourne Institute Index of Consumer Sentiment lifting by 4.1% to 112 in December, up from 107.7 in November.
Some forecasts of property price crashes pointed to falling overseas migration in Australia, but Ryder says this demand is now being replaced by expats coming home in “droves”.
The fast-tracking of infrastructure in Australia to aid the economic recovery will also be a big boost for the property market by boosting economic activity and jobs, as well as improving the appeal of specific locations, adds Ryder.
“Nothing bumps up property markets like infrastructure spending; it’s going to be huge for the property market,” he says.
“That factor is almost going to guarantee that across Australia there is going to be a real estate boom in 2021.”
When it comes to deciding what to do with your hard earned savings, the choice between investment opportunities can be difficult. There are a number of factors that might convince a potential investor to invest in one opportunity over another.
In particular, property as an investment is something that has been extremely profitable for a number of people. With this being said, in deciding whether or not you should buy property as an investment, you should consider various factors.
The Risk Involved in an Investment in Property
An important factor in determining which investment suits your needs is the amount of risk you are willing to take. While some investors are extreme risk takers and like to put more of their investment towards something volatile such as cryptocurrency, others are more risk averse, and prefer to accept a lower return on investment with known risks as opposed to unknown risks.
In comparison to other investment opportunities such as crypto and shares, investing in property is relatively safe. With this being said, it doesn’t mean that there is not the potential for you to lose your investment. When considering the 2020 pandemic in particular, risk surrounding property is somewhat higher than it would otherwise be.
Volatility due to the pandemic has meant that Australian housing prices have dropped, open houses and auctions have been halted, and rent reductions have occurred. This might mean that you are tempted to invest, in anticipation of future price rises, however the pandemic also means that future price changes are uncertain.
Being Prepared to Pay it Off
One of the biggest considerations to make in deciding to buy a property as an investment is in terms of whether you are prepared to make the necessary repayments. These will likely take a significant chunk out of your regular income, while other investments do not require the same commitment.
Rent money will obviously contribute to these repayments, however it won’t cover them entirely. Plus, in the event of a vacancy (which is likely to happen at some point), you’ll be covering these repayments entirely.
If you are planning on putting down a deposit and making repayments on a property, you’ll want to know how much you will be paying on the mortgage – calculate it here.
Investing in a Property to Maintain Your Lifestyle
In many situations, investing in a property is often an alternative to buying a first home. If this is the case, this decision will involve a lot of thought in itself. However, a significant factor that increases the appeal of investing in a property is that it can allow you to maintain your current lifestyle.
Purchasing a property in an area you want to live in might be out of your financial means – if you want to live in a trendy area with parks, amenities, cafes, shops and entertainment, the cost of the property will be higher. Investing in a property can solve this problem as you can choose to invest in an area that is cheaper or more rural, and then continue to rent in the area you want to live in.
Don’t Overlook Maintenance, Upkeep and Management Requirements
Another factor that makes buying an investment property an involved process is the maintenance and upkeep involved.
This starts with the tenants – choosing the right tenants can be a difficult process, and one that is often ongoing. The right tenants need to take care of the home properly, be a positive contribution to the neighbourhood (you don’t want to be receiving complaints from neighbors), and make payments in a timely manner. Finding the perfect tenant is easier said than done, and depending on how long they plan on living in your property, you might be screening the next occupants sooner than you would like.
Regardless of the tenants, there are going to be maintenance requirements. Even the perfect occupants will come into some sort of maintenance requirement, whether it is to do with plumbing, the kitchen, or the general structure and quality of the property. Having to determine whether this is the fault of the tenants or not is another problem in itself, but ultimately you may end up having to pay for these maintenance costs.
Finally, you have to deal with the management of the property in general- this means taking the time to deal with the processes involved in finding tenants, performing upkeep, keeping neighbours happy, and more. On the other hand, you could enlist the help of a professional property manager – this is a more costly but convenient option, and will depend on your timetable, income and personal preference.
THE FEDERAL Government has made a very significant change to capital gains tax (CGT) affecting ex pats, but it’s likely there are many Australians living overseas who are still completely in the dark about it.
Put simply, the change entails the CGT exemption for the Australian family home, which has been in existence for 35 years, being taken away from expat – or non-resident – Australians if they sell the property while living overseas.
Currently the exemption applies so long as the home was rented out for no more than six years at a time, but from July 1 this year the new changes will take effect.
What are the changes?
The change to CGT means expats seeking a principal place of residence exemption must sell before June 30 or hold the property and wait until they return home to live in it again before selling. If they don’t, they risk paying a potentially hefty CGT bill on their home.
If the property was purchased before May 9, 2017 expats can sell before June 30 this year and avoid CGT, but if the property was purchased after May 9, 2017 and sold while living overseas CGT will still have to be paid, as there is no principal residence exemption.
The legislation, which seems to have been rushed through after both political parties previously promised they would exclude expats from the changes as it was unfair, will also apply retrospectively.
That means capital gains will be taxed for the entire time the property has been owned, rather than just for the time the occupant has lived overseas, which could become very expensive for those that bought their properties as far back as 1985, with property prices having risen very significantly.
The changes to CGT will also affect migrants who buy a home in Australia to live in while they are here, and then sell after returning home.
What impact will the change to CGT have on expats?
The change will only affect expats who sell a home in Australia they have previously lived in while they are living overseas.
It’s difficult to determine exactly how many expats will be impacted, but it could be tens of thousands to hundreds of thousands.
And then there is not only current expats to consider, but those moving overseas in the years to come, particularly in an increasingly global economy where many people are going abroad to work.
Those that are affected will be significantly disadvantaged. Experts agree it’s an unfair tax to drop on Australians who have purchased in good faith, believing their home would be exempt from CGT, and continued to contribute to the Australian economy through taxes on their homes if they are rented out.
It should be noted that there are some concessions for the application of CGT to the homes of expats selling while overseas, with an exemption applying for life events such as a terminal medical condition, death or divorce.
What should expats do?
It appears this change to CGT has been brought in without much fanfare to even alert expats of its existence.
There will likely be many people caught unawares and potentially sell while overseas without realising the tax laws have changed, incurring a significant CGT bill.
If you’re an expat, the first thing you need to do is get educated on the change in the CGT rules, and then determine the best course of action for your circumstances.
You’ll need to do so quickly, with the deadline to sell (the contract date) being June 30 this year.
It’s a good idea to seek professional advice on the costs involved in your circumstances and whether you’re better off holding or selling.
Impediments to waiting until you return home include that your move may be permanent, you may be unable to hold the property financially, or you may be returning to a different city than the one which you left.
For those returning, you must be genuinely returning to Australia and can prove that you have quit your overseas job, cancelled a property lease and taken your children out of their overseas school, for example.
For those who do have to pay CGT, there could be issues in determining the correct tax liability because those who have purchased up to 35 years ago may not have kept proper records.
Capital gain is calculated using the original cost base, which includes expenses related to the property purchase such as buying costs, holding costs and renovations, as well as the cost of the property itself.
This may lead to expats selling their home while overseas being charged more CGT than they would have, if the proper records had been retained.
WHAT A rollercoaster the past year has been for property!
We saw a lacklustre start to 2019 largely due to apprehension around last year’s Federal Election and particularly proposed housing-related tax policies from the ALP.
Activity was also subdued due to the fallout from the Banking Royal Commission and tightened lending restrictions imposed by the Australian Prudential Regulation Authority.
However following the Federal Election in May and confirmation the status quo would continue the market slowly started improving as confidence returned, and now it’s firmly in recovery mode.
The difference between the start of 2020 and the same time one year ago is like “chalk and cheese”, says Hotspotting.com.au founder Terry Ryder.
“One year ago everything was super negative but now things are much more positive,” he states.
But just how positive is the market? Will the price growth that started in 2019 continue this year, and if so, will it be at a strong pace?
Let’s first look at why prices have started to rise again…
In the wake of the uncertainty in the property market over 2019 many sellers decided to hang onto their homes, fearing they wouldn’t get the desired price, and construction also eased.
This led to a lack of available stock for buyers to choose from, which Ryder says was one of the several factors contributing to the price growth that started towards the end of the year and has continued into this year.
“One of the factors in the escalation of prices, particularly in bigger cities, was that at a time when demand recovered quite strongly, there was very little supply and vacancies were generally low in most locations around Australia,”
“There was a lot of competition for good properties available, which was a big factor in price growth last year.”
Now, in 2020, there are signs supply is starting to rise, with sellers more confident in testing the market, and more construction in the pipeline, so price inflation that occurred due to a lack of stock will likely be tempered moving forward.
National residential property listings increased in January by 2.2%, according to the latest data from SQM Research. All capital cities saw a rise in listings, but the largest rise was in Sydney of 5.1%, followed by Hobart at 4.9%.
Sydney’s listings are still 24.8% lower than 12 months ago, while nationally listings are 10% lower than a year ago. But there are likely to be further increases in the coming months.
Dwelling approvals are also improving, with annual growth lifting to 2.7%, the first positive since June 2018.
“Markets are rising and people can get pretty good prices for their properties if they’re willing to list them,” says Ryder.
“Consumers were a bit battered and bruised after a period of negativity, including fears of the Federal Election, but since the middle of May last year there have been a series of fortunate events.”
These events include an easing of lending restrictions, tax cuts, three interest rate reductions and more positive media coverage on the market.
“There are always multiple factors in why the market rises and these factors are all part of the equation,” says Ryder.
“But with more supply coming to the market this year, it will take some pressure off prices, particularly in Sydney and Melbourne.
“The market will settle down a bit and be what you might call a ‘normal’ market.”
Indeed, the latest CoreLogic Home Value Index found that while property prices rose across every capital city in January, the rate of growth had slowed in recent months.
Over the past year prices have grown by 4.1%, which is the fastest pace of growth for a 12-month period since December 2017, but in January the index was up by a total of 0.9%, down from its recent monthly peak of 1.7% in November.
Growth markets are aplenty this year
With Sydney and Melbourne likely to take a backseat this year, smaller capital cities are set to come to the fore, including Brisbane, Perth, Canberra and Adelaide.
“Sydney and Melbourne have had substantial and lengthy booms, and the increase in supply and the affordability factor will tend to suppress the level of growth in those cities,” says Ryder.
“Cities that haven’t had a big run but have the right dynamics in play will have a strong year.”
Brisbane is overdue for growth, and all the ducks are starting to fall into line for the city to do much better this year, explains Ryder.
“All indicators are that Perth has finally moved into a recovery after five years of gradual decline and Canberra looks solid, underpinned by one of the steadiest economies in the country.
“Adelaide is always underrated; it’s got a lot more going for it than people realise and it will have a good year as well.”
Hobart has had a good run and is likely past its peak, and Darwin is still struggling, adds Ryder.
He points out that regional areas also have the potential for growth this year, with the strongest market being regional Victoria, with parts of regional New South Wales also looking promising, including Orange, Wagga Wagga, Goulburn and Dalby.
In regional Queensland the Sunshine Coast offers some of the best growth potential, with a strong economy, while some parts of Central Queensland are also recovering, including Mackay.
Your Investment Property in Australia Doesn’t Have to be Pre-Owned
Whether you buy an old or new property is one of the key decisions you’ll have to make when buying an investment property in Australia. Both have their advantages. With an old property, you can often secure a great deal, plus there’s potential to renovate and add value. You can also feel more certain about how the property will perform
A new investment property in Australia may not come with those assurances. However, you shouldn’t discount them outright. In fact, investing in new homes comes with several benefits that may earn you more money.
Benefit #1 – Higher Capital Growth
As we all know, location is important when buying an investment property in Australia. Choose the wrong location, and you limit the capital growth your property will enjoy. Buying an old property in a desirable location practically guarantees you’ll enjoy capital growth. That’s a given.
But many don’t realise that the same applies to new properties as well. In fact, a new property may enjoy greater capital growth than an old property in the same location. Newer properties tend to enjoy higher levels of demand than old properties. Buyers and renters want the latest mod cons, which they won’t always get with an old property. This increased demand makes the location more desirable which contributes to increased capital growth for your property.
Benefit #2 – Construction Quality
Have you ever bought an old investment property in Australia, only to find that you have to spend thousands of dollars on renovations? It’s not an uncommon problem. Properties wear out over time. Fixtures need replacing and appliances need maintenance. This is all money coming out of your pocket.
Yes, you can claim tax deductions in Australia for some of this work. But you may not want to deal with the hassle.
A new property allows you to avoid those problems. There are stringent regulations in place to ensure all newly-built properties meet certain standards. They have to be built to a certain quality level, plus they must be energy efficient. This means you can feel certain that the construction quality of a new building will be high. As a result, you don’t have to spend more money on making improvements.
Benefit #3 – Lower Prices
A lot of people will tell you that it’s almost impossible to get a new property at a low price. Developers know the value of their properties and won’t sell for anything less.
This may be true when trying to buy a new property after the developer has already sold most of their stock. However, it discounts the potential savings you could by getting in early.
Keep your ear to the ground so you can find out about upcoming development work. If the houses are in a desirable location, you should try to get in as early as possible. Many developers sell their new properties for less than they’re worth to investors who make early offers. If you’re among that group, you’ll have a great property that cost you less than it should have.
Benefit #4 – You Attract More Tenants
We touched on this point earlier, but it’s worth coming back to. Tenants want properties that offer the latest appliances. They also want to pay as little as possible on their utility bills.
Buying an old investment property in Australia sometimes means that you can’t offer these things to your prospective tenants. The fixtures and appliances may be out of date, which lowers the demand. The property may also not be energy efficient. In the end, you have to charge less rent than you may wish so that you can attract tenants.
That shouldn’t be a problem with a new property. The developers will have installed modern fixtures and appliances, which attract more tenant applications. You don’t have to pay for renovations, plus, you can charge higher rents.
Benefit #5 – You Get a Blank Slate
Let’s assume you aren’t buying the property as an investment. Instead, you want to live in it yourself. If you buy an established, older property, you’re going to have to deal with the previous owner’s choices. You may have to spend a lot of money to change things until they’re just the way you like them.
When buying a new home, you have more choice. For example, you can discuss your preferences with the developer to ensure the home is built to meet your needs.
The prospect of having a blank slate appeals to many buyers. Plus, you get to enjoy the other benefit’s we’ve mentioned if you do decide to take on some tenants.
Information goes a long way when you’re buying an investment property in Australia. Without information, you can’t prepare for the negotiations. This is when you sit down with the seller to try and find the right price for your investment property in Australia.
However, the information you have isn’t the only weapon in your arsenal. There are plenty of other tactics that you can employ to get a good deal. With that in mind, we’ve come up with five hot investment property tips for beginner negotiators.
Tip #1 – Learn as Much as You Can About the Seller
You may think the state of the property market would make it impossible to negotiate a good deal. If property prices are going up, it’s easy to assume that all sellers you meet will ask for more money.
However, this line of thought doesn’t take the seller’s situation into account. You need to find out everything you can about the seller when buying an investment property in Australia. For example, do you know the reason why the seller is getting rid of the property? If not, then you need to find out.
Many people sell because they’re in distressed situations. They may be in financial difficulties, or need to sell quickly to fund a new purchase. You can use this to your advantage and negotiate a better deal. After all, a motivated seller is one who will listen to lower offers.
Tip #2 – Sweeten the Deal
This ties into our first tip. Sometimes, a seller wants something really specific, which will make your bid for their investment property in Australia more attractive.
Consider the following example. The seller is currently going through a divorce. It’s a heartbreaking and emotional situation, but they really need to sell their property before the divorce is settled. As a result, that seller may be looking for a buyer who can help them settle the sale quickly, so they can get on with the rest of their life.
That’s where you come in. If you limit the terms attached to the transaction, you can speed up the process. That gives you some leeway to negotiate a lower price with a seller who wants to get rid of a property quickly.
Tip #3 – Get Pre-Approval on a Home Loan
Sellers love serious buyers. If you enter negotiations knowing that you don’t yet have the money to make the purchase, you’re going to sour the seller to any offers you might make.
This means it’s best to get pre-approval on a home loan before you try to buy an investment property in Australia. Lodge your application and ask your lender to provide proof of the pre-approval.
You can then take this into your negotiations. Having pre-approval shows that you’re a serious buyer who wants to move forward. This will make the seller more willing to negotiate terms with you, which could be your pathway toward making a lower offer that saves you some money.
Tip #4 – Make the Right First Offer
The first offer you make on your investment property in Australia is crucial. Go too low, and you may insult the seller so much that he or she stops taking you seriously. Make a high offer, and you may end up spending more than you need to.
This is where your research is going to help. Find out how much similar properties in the same area are selling for. You can use this to get an approximate figure for the value of the property. Compare this to the seller’s valuation to ensure you’re both on the same page.
From there, you need to make your offer. It’s usually best to offer somewhere between 5 and 10% less than the seller’s valuation. This shows you’re a serious buyer, while giving yourself some wiggle room if the seller comes back to you with a higher figure.
Tip #5 – Don’t Mention Your Budget
Remember that your seller’s agent is going to try and extract as much information as they can from you. After all, they want to secure the highest possible price for their clients.
Talking to the seller’s real estate agent can offer you more information. However, it can lead to you giving away information that the seller could use against you.
The key is to not let the seller know how much you’re willing to spend. If they have that figure, negotiations are going to start at a much higher price than you had hoped for. Play your cards close to your chest, while still making offers that show you’re a serious buyer.
YOU have to be a millionaire to be able to invest in property, right? Wrong.
Contrary to popular belief, anyone can be a property investor. And in fact, it’s those who aren’t particularly wealthy that should be stepping up and onto to the ladder to improve their financial position going into the future.
But if you’re on a low income, how do you get that foothold? The first thing is to adopt the right mindset – ‘I think I can’ should be your mantra.
The next thing to do is get creative when it comes to finding opportunities by looking outside your local area or sourcing different finance options.
At the end of the day it’s all about getting into the market, but make sure you consider your situation carefully to ensure you can afford it before jumping in.
The most important thing is to set your goals in the context of a long-term plan… and make sure you stick to it, taking one step at a time. Property is a long-term game, so don’t expect to buy and sell quickly and become rich.
Here are some quick tips to help low-income earners get into the market:
Bigger isn’t always better
Sure, we’d all love to own an inner city pad. Imagine sitting back at your next family barbie telling everyone about your trendy property in Sydney’s Surry Hills? You can just see the look on everyone’s face!
The reality is, however, that very few people can afford those types of properties. And often they don’t have the best growth potential, so while they might be great to boast about, they don’t make for the greatest investments.
The best way forward for low-income earners is to start small. Buy the right property to set you on the path to financial freedom – that is, an investment you can afford with all the fundamentals required for growth. Focus on the profit. That might mean buying an apartment in a middle-ring suburb of a capital city or a house in a regional area.
Once you get into the market and acquire some equity, you’ll have the ability to grow your portfolio, as long as you can service more debt.
Leverage is your best friend
Using existing equity to buy again – that is, leveraging – is the key for any investor to grow their portfolio.
Your own home can be the best source of equity, but if you’ve just made your first purchase you might have to patiently wait until the property grows in value.
Save a deposit
Property is a great way to build wealth, but you need money to make money, right? Well, yes. If you don’t already have a property with existing equity to leverage off you’ll have to save a deposit.
But if you aim to buy a more affordable property in a growth area the deposit required will be far less than that for an expensive inner-city property.
Set a budget, and more importantly, stick to it. Make sure that budget includes putting aside some savings every week – even if it’s just $10.
Also look for ways to increase your income, such as selling unwanted items on eBay, setting up a home business, even perhaps doing letterbox drops in your free time. You may have to make some sacrifices in the short-term to get ahead.
Once you have a deposit and you make a purchase, ensure you always have surplus savings in the kitty to cover you if something goes wrong.
Invest first, buy your home later
We’ve all heard plenty about ‘rentvesting’ lately, the buzz word that refers to an increasing trend by which people are choosing to rent in an area they want to live, and instead buy an investment property.
This is a great option for those on a low income looking to break into the market. Buying an investment property you can rent out will help you get into the market – and stay in it – for a smaller outlay of money. If you choose carefully and maximise your deductions you might even be able to break even or end up with more money in your pocket at the end of the day.
Look for properties that won’t cost you too much
They’re not easy to find nowadays, but if you can find a cash flow positive property – or at least one as close to neutrally geared as possible – it will help you get into the market on a lower income, as you won’t have to dig as deep into your savings to keep the property.
Be aware that these types of properties may not give you as much capital growth down the track (see our earlier blog on ‘Should you buy for capital growth or rental yields’), but it will help you to get a foot in the market.
Get some help from mum and dad
Staying at home with mum and dad longer can help you save money to put towards a deposit for a property. You might also be able to bring forward your inheritance by getting a monetary gift from mum and dad, or they might even be willing to go guarantor for you.
When it comes to investing, going it alone can be tough. To ease the financial burden consider finding a partner to invest with. Joint ventures can give you greater borrowing power and help you hold the property by having another person to share the costs. If you go down this path make sure you draw up an appropriate partnership agreement spelling out all the rules and regulations.
Apply for a PAYG withholding tax variation
Rather than struggling through the year and holding out for a decent income tax refund at the end of June, you can apply to have the amount of tax withheld from your income reduced. Effectively this means you’ll get your refund throughout the year rather than waiting. This is perfect for low-income investors, as it will help you hold property by alleviating financial pressures throughout the year.
Demonstrate you’re a safe bet
If you’re on a low income, inevitably it will be harder for you to get a loan and to prove to a lender you can service it. To assist in getting finance, ensure you keep your credit rating up. Pay your bills on time, keep your credit card debt low, prove you have the ability to save.
A lot of people buy property when interest rates go right down. Like now, there are a lot of people buying because interest rates are low. Everyone goes out and buys and that creates more demand as well. And who would not want to buy if you can lock in interest rates and borrow at 5% for five years?
But for me, I don’t want to rush. Sometimes I tend to sit back and wait when the market is hot. I’ve learned that sometimes being patient with your money is good. You don’t have to buy something every year. It might be better to save up for 10 years and then come and pounce when other people are not in the market.
Sometimes when the rate goes up to 9% and no one can afford to buy, I’d rather buy then and have enough money and not have to worry about having a big debt or fighting with other investors. You don’t want to be in so much debt when rates go up again.
I don’t want to buy when there are 100 people going to auction against me. I’d rather buy when there are not a lot of buyers.
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