Is Now The Time To Invest In Property?

It seems that stories of massive layoffs, stimulus packages and massive triple digit daily sharemarket losses could be behind us. Job security seems to be firming up yet interest rates continue to remain lower than they have been in years, property prices are still soft and rental returns are solid. So is now the time to get back into the property market?

I certainly believe so. Thanks to the combination of low interest rates and high rental yields, property investment may now deliver cash flow neutral or even cash flow positive returns - and that could mean that your property could now pay for itself. Moreover, there may be significant tax breaks to boot. By the way, when I say the property could be cashflow neutral or cashflow positive, I'm not talking about a property in a small country town. No, I'm talking about quality property in and around prime locations.

Of course, successful property investment does require homework and a little prudence. But don't be put off - it is by no means too complex for the average Australian. So whether you're a seasoned investor or a would-be first timer, now may just be the ideal time to make it happen.

A word of caution:

I believe anyone can become wealthy through property but make sure you know your capacity and also put in some fat into your budget in case of future interest rates rise. Interest rates will definitely have to rise again - it is only a matter of when. We've all heard about the subprime mortgage crisis and one of the major causes of that was property owners maximising their budgets at low interest rates. So the moment interest started to rise even a little, they were unable to pay their loans. You don't want that to happen to you.

Therefore, before you decide what to buy you need to establish your budget. With a clear idea of what you can afford to borrow you'll be in a strong position to determine what type of property to focus on and in which price bracket so you can take advantage of the current low interest rates.

If you would like some assistance in determining how much you can borrow for your next property, then feel free to get in touch with my team at Votiva. Not only can we quickly give you an indication of your borrowing capacity we can even help you secure a pre-approved loan.

Once you know your buying power you can think about what type of property to purchase. Most investors favour residential property, typically a house or a unit. Each comes with its pros and cons and there's no right or wrong decision - it really depends on your preference.

As I'm sure you have heard, regardless of the property type, the location can make the difference between a good investment and a lemon. While there can be exceptions, you're generally looking for a property that is close to public transport, has easy access to shops, parks, schools and restaurants and is serviced by a good road infrastructure.

With a clear idea of the right location you can set about researching the market.

Remember, for the greatest success, property investment should not be considered as a short-term game. Rental values will always increase over time with a well located property and so too will your returns.

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