Is now a good time to buy an investment property?

investment property

You’ve bought a home. And now you might be considering adding an investment property to your portfolio. But have recent interest rate hikes cooled your heels? We’ve outlined reasons why now may still be a good time to buy.

To buy or not to buy, that is the question.

There’s no denying that rolling rate rises might have some sections of the media spouting doom and gloom.

After all, national property prices have dipped and higher interest rates can lower your borrowing power.

However, if you’re in a position to buy now, the current climate can provide less competition and more power to negotiate a good price.

Also, rental tenancy vacancy rates have reached record lows, meaning the demand for rentals is high.

So if you’re ready to dip your toe into property investment, we’ve outlined below why it could be a good time to do so.

It’s a buyer’s market

With rising interest rates and inflation, there’s been a softening of the market and this may reward those who are ready to buy now.

CoreLogic data shows there are fewer buyers at present, and properties are increasingly sitting on the market.

In the three months to September, median days on the market increased to 35 days. That’s a big increase from a median of 20 days in November 2021.

Fewer buyers can mean more property options for you to choose from and less competition when putting in an offer.

And by targeting properties that have been on the market for a while, you could potentially have more bargaining power (just be sure to do your due diligence!).

Low rental tenancy vacancy rates

Currently, there is a high demand for rental properties across Australia.

At 0.9%, the current national rental tenancy vacancy rate is the lowest it has been since 2006, according to SQM Research.

That means the likelihood of your investment property sitting empty now is low.

People are looking for solid rental properties. And if you’ve got just the thing, your investment property could have a number of good tenants putting in applications.

Flexibility around location

When purchasing an investment property, you’re not locked into buying in your home state or city.

You can set your sights further afield to make the most of what the current property market has to offer.

You can look to buy in areas where property prices have already dipped and leverage the current buyer’s market to negotiate. Also, consider purchasing in an area with a healthy demand for rental properties.

That way, you can make a financially sound purchase and increase the chances of having a good tenant in your property sooner.

Possible lower cost of entry than for owner-occupiers

You’re most likely more discerning when shopping for a property you want to live in – we all have personal preferences we want met.

And unfortunately, lists of non-negotiable bells and whistles usually come with primo pricing.

But when buying an investment property, you can be more flexible, which can open up more affordable options.

Look for the essentials that tenants want, such as a safe, comfortable, and low-maintenance property. And with lower competition now, there could be more viable properties to choose from.

The french door, olympic-sized pool, and ocean-view wish list that usually blows up budgets need not apply.

Give us a call

If you’re ready to dive into property investment, come and talk to us.

We can walk you through what you need to consider when it comes to your finances, such as your borrowing power, unlocking the equity in an existing property, finding the right loan, and much, much, more.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

So we’ve got some tips to help you switch from renter to homeowner in a timely (and confident) way.

Take advantage of the buyer’s market

Buying now or in the near future could mean less competition for properties, price drops and sellers willing to negotiate.

And recent rate hikes mean that, even during the spring selling season, we’re seeing fewer buyers. In fact data shows the median number of days that properties sit on the market is now 35, compared to 20 days last year.

And in response, property prices are falling. September data showed a 1.4% drop.

So by shopping around in the right areas and putting your negotiator hat on, you may get a price that could make buying cheaper than renting.

And most importantly, buying property and making mortgage repayments can create equity for you … instead of your landlord.

Get in on government schemes

There’s no denying that saving a big enough deposit to buy can be a bit of a slog.

But what if there was a way to sidestep the standard 20% deposit? And possibly avoid stamp duty too?

There are a number of government schemes you may be eligible for that can fast-track house buying by an average of 4 to 4.5 years.

The federal government offers low deposit, no LMI loans for eligible first home buyers, single parents and regional first home buyers.

Also, all state governments (except South Australia) have first home buyer stamp duty concessions for those eligible.

And you can stack these schemes together for more bang for your buck.

But you’ll have to move quickly on the no LMI schemes – they’re allocated on a first-come, first-served basis every financial year.

Give us a bell

Keen to make the leap from renter to home owner? If so, you’ll be busy researching the market and learning the art of the deal – so why not get a helping hand with your finances?

We can help find the right loan for you and provide you with helpful guidance that could increase your chances of mortgage application success.

And while we’re at it, we can assist you in applying for any money-saving government incentives you may be eligible for.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.