The next instalment in our frequently asked questions blog series is:
“When should I start investing in property?”
The best time to start is as soon as you can afford to.
Investing in property is something of a ‘snowball effect’. The earlier you get in, the bigger the effects of the compounding over time. In short, the quicker you get in, the quicker you can start making money from your investment.
It also pays to move quickly. The properties that we put together for our clients tend to go quickly as they are in popular areas, supported by things like growing and diverse industries, higher education and strong housing demand.
What are the common objections to investing in property?
Having worked with many clients over the years, we think we’ve heard them all!
“I’m too busy to invest” or “It’s too hard” – that’s why you engage the services of a professional like Equidel, because we make it easy for you, while you get on with life.
“I’ve got plenty of time before I have to worry about retirement” – Do you really want to wait until you’re 65 to retire? Imagine if investing in property properly could help you be a self-funded retiree, earlier!
“But the property market is going backwards” – If you read the papers, you’ve probably read that the property market is in decline. These articles traditionally only reference the CBDs of Sydney and Melbourne, but there are over 3,000 property ‘markets’ in Australia, not just the two capitals on the eastern seaboard! Areas that Equidel clients have been investing in have grown up to and over 20% in just 12 months.
To illustrate, let’s look at an example of brother and sister – Todd & Jill.
Both Todd and Jill had decided they were ready to invest in property.
Todd made a fast decision and bought one of the first properties he had presented to him. This property was worth $400,000, and Todd needed $80,000 to be able to invest in this property.
Jill, however, took her time, and 12 months later was still trying to decide on where she wanted to invest and in what asset type.
After 12 months, Todd had his investment property revalued, and it came in at $480,000. He had made $80,000 from his investment in just 12 months, while his sister was still in the same net position.
How do I know I can afford to start investing in property?
You may not know.
You can take a look at our previous blog – How much do I need to invest in property? But we find that one of the key factors is having equity in your current home (over and above 20% of the house value), and a regular, weekly income.
But then again, you don’t necessarily have to be a home owner to invest! There are people who are renting themselves who also invest. Take a look at our Rentvesting blog for a bit more on this.
If you’re not sure, you can chat to your Accountant, or Equidel can also assist with assessing your readiness for the market.
While there certainly is a sense of urgency in getting into the property market, you need to ensure due diligence has been undertaken and that you are making an educated and well-informed decision. There’s no point rushing in if the property hasn’t been objectively tested against something like the Equidel Property Analysis Matrix to ensure the risk has been mitigated.
Wondering if you’re ready? Get in touch with Equidel: Contact Us – we like to start with coffee!