There's no better time to pick up the real estate classifieds and begin browsing for your first property investment, as a perfect storm of stagnant house prices, a glut of vendors and relatively low interest rates pave the way for plenty of bargains.
If you’ve been thinking of taking the plunge and becoming a property investor, then 2011 is the ideal time to enter the market, says property expert Chris Gray, CEO of Empire.
Gray, a qualified accountant, buyers’ agent and mortgage broker, says the combination of relatively low interest rates with the long-term potential for strong yields and capital gains presents the ideal conditions for property buyers looking to get into the market.
“If you have the finances to buy, 2011 will provide some great opportunities to buy that first investment property,” explains Gray.
“For those fixated on getting a bargain, there is a feeling that 2011 will be more of a buyer’s market. This is because the heat has come off a very buoyant start to 2010. Keep in mind that a cooling off doesn’t necessarily mean prices will fall – it just means that buyers are going to pay more reasonable prices, rather than frenzied record prices. Prices may go down more in low demand areas, but these areas will not give the same long-term results as the blue chip suburbs where there is higher demand and less supply.”
According to Gray, buying median priced properties located close to the CBD is the smartest way to achieve long-term wealth.
“The best strategy for anyone looking to buy their first investment property is to buy blue chip, median-priced properties in areas where there is always demand,” he says.
“This is generally suburbs located 5–15km from the CBD, and near the beach in Sydney, or the bay in Melbourne. If you buy an investment property in these areas you will always be able to attract working professionals, which reduces the risk of the property being untenanted and assures you of good rental returns.”
Buying your first investment property - tips for success:
- Put in the legwork
You’re investing with a lot of money, so don’t take unnecessary risks by winging it. “Do your research on sites like RP Data or Residex, and get ready to enter the investment market with a bang in 2011,” Gray advises.
- Ensure your finances stack up
Speak with your broker before you begin stalking real estate websites and viewing open homes. “The right time to buy your first property – whether it’s a home or investment property – is when you have your finances in order,” Gray says.
- Buy where tenant demand is greatest
Properties close to leisure facilities, workplaces, beaches and transport, priced from $550,000 - $800,000 are affordable to rent for the majority of full time workers. “Suburbs close to CBDs and leisure facilities are the places working professionals will always wish to live in, so as an investor, you’ll never have any problems leasing the property,” Gray says.
- Invest for the long term
“As an investor, you want to be in the market for the long term, which means there is no point trying to predict the next boom,” Gray warns. “If you do this, chances are you’ll miss it. It’s far better to look for quality stock that will always be in demand, rather than hoping to cash in on the ‘next big thing’.”