Nila Sweeney

Banks have loosened their lending criteria making it easier for those on lower incomes to enter the property market.

During the GFC, it was difficult to borrow more than 90% of a property’s value, which made it harder for people with little deposit to get into the market. But in the last six months a number of lenders have started to offer funding for up to 95% LVR.

Smartline Personal Mortgage Advisers managing director Chris Acret says this opens the door for people on lower incomes.

“Plenty of people with a minimal income have gone down this path by thinking ‘outside the square’ as to how they can make it happen."

“See if you have family and friends who might like to invest with you, or maybe your parents are prepared to act as guarantor to get you started – there are options.”

Smartline is recommending potential property investors to look for low-priced properties that offer high rental returns.

“This will probably mean looking to the outlying suburbs of the major capital cities and to regional areas, such as mining towns. You should probably be looking at properties that are priced at $250,000 or less.”
According to Smartline, with interest rates at 7% potential investors should be looking for yields of 8-9%. Ideally, property investors would be able to rent a $250,000 property for $380/week.

Acret advises low income earners to consider these points:

• Avoid negative gearing: Low income earners will be less able to fund shortfalls, so look for opportunities that are positively geared or at least neutrally geared.
• Depreciation: this could put your investment into the negatively-geared territory
• Tax adjustment: Apply to the ATO for a tax adjustment at the beginning of each financial year
• Do your homework: Your Investment Property regularly provides readers with up-to-date information in the nation’s property hot spots, as does RP Data
• Interest-only loans: Repayments will be about 25% on this type of loan, compared to a principal and interest repayment loan

In its inaugural issue, Your Money Magazine interviewed property investing expert Peter Koulizos for the inside track on the smartest places to buy in the country.

Here are his suggestions:

Queensland:

Woody Point – pop. 3789

Key drivers:
• Upgrades to roads and infrastructure
• Public and private money being spent
• Proximity to ocean

Woolloongabba – pop. 3832
Key drivers:
• Upgrades to roads and infrastructure
• Proximity to city
• Large tenant pool

New South Wales:

Erskineville – pop.6557
Key drivers:
• Going through gentrification process
• Renovation potential
• Proximity to ocean

Darlington – pop.2040
Key drivers:
• Proximity to city
• Large tenant pool
• Access to public transport/amenities

Australian Capital Territory:

Narrabundah – pop.5528
Key drivers:
• Proximity to prime suburbs
• Access to amenities
• Prestigious reputation

Braddon – pop.3574
Key drivers:
• Proximity to city
• Large tenant pool
• Renovation/redevelopment potential

Victoria:

Kensington – pop. 8676
Key drivers:
• Proximity to city
• Going through gentrification process
• Large tenant pool

Carlton – pop. 12050
Key drivers:
• Proximity to city
• Access to public transport/amenities
• Large tenant pool

South Australia:

Port Noarlunga – pop. 2549
Key drivers:
• Proximity to ocean
• Going through gentrification process
• Renovation/redevelopment potential

St Peters – pop. 3168
Key drivers:
• Proximity to city
• Access to public transport/amenties
• Prestigious reputation

Western Australia:

Mandurah – pop.83032
Key drivers:
• Proximity to ocean
• Upgrades to roads and infrastructure
• Renovation/redevelopment potential

Victoria Park – pop.7174
Key drivers:
• Proximity to city
• Proximity to river
• Large tenant pool

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker