Becoming a property investor often seems out of reach, but taking a few simple steps could make this dream a reality much sooner.
There can be many reasons why first-time investors can be put off taking action towards purchasing their first investment property.
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Investing in property doesn’t have an age requirement – you can start at anytime.
They worry that they don’t have the funds, are confused by what they need to know, or feel they are too young to start creating a property portfolio.
However, Daniel Hubbard, manager of Invest by Metricon, says becoming a property investor is a more achievable dream than people think.
“Throughout my 20 years in the industry, a common question I’m asked is ‘How can I afford another mortgage?’ But once they understand the rental income, tax benefits and the actual out-of-pocket costs, they realise it is actually achievable,” he says.
So, if you’re a future investor in waiting, here are some things to consider.
1. Know your equity
One of the most significant barriers to entry for property investors is their perceived lack of funds.
However, many current property owners may not realise that the equity they have could allow them to enter the investor market without needing to save another deposit.
You might be sitting on more equity than you realise – effectively an investment property deposit.
“I call it dormant equity because often it’s just sitting there and people don’t realise, they can leverage it into an investment property,” Hubbard explains.
He advises people who have owned property to work with an expert to tally up how much equity they have and whether this is enough to get started.
“It’s simple and available to most everyday Australian homeowners,” he says.
2. Earlier adopters have historically earned big
The property market has cycles, but according to Hubbard, the only timing that’s really important for investors is “time in the market”.
“The property market will always continue to move through cycles. It’s not about picking the perfect time to enter the market, but your length of time in market so your investment has time to grow,” he explains.
“The reality is a lot of people come to us in the their late 40s or early 50s only because they’re more aware of their retirement position than younger people.
“And, we often hear people say, I wish I would have done this 10 or 15 years ago because they see how much wealth it can generate.”
Historically, starting earlier has resulted in more capital growth, increased rental income, and the ability to expand your property portfolio over time.
“We just had a young investor come on board just recently, who’s 23,” Hubbard says.
“He is the youngest investor we have had join our program so far. With so many years ahead of him, he can potentially continue to build his investment portfolio and create a strong base of wealth for his future.”
Those who invested early have typically seen better results over the long term. Picture: Getty
3. Think about building new
Traditionally, most investors have purchased older properties, but increasingly, first-time investors are taking advantage of new builds.
“There are significant tax benefits,” explains Hubbard.
“These homes are brand new, which means very low maintenance and lower costs. They also hold a very strong rental demand being new and in a high-quality masterplanned estate.”
4. Know where to start
Of course, investing is tricky, and many people procrastinate because they don’t know how to take the next step.
Invest by Metricon is a comprehensive service for budding property investors, helping them through every stage, from understanding your financial position and construction to property management services.
Investing in property can be made easier with the right advice, something Metricon can provide.
“People would recognise Metricon as a business that builds homes for people to live in themselves, however, Invest by Metricon was created specifically to help people navigate all aspects of property investment,” Hubbard shares.
“At the initial consultation, we go through the strategy and technical aspects of investing before we even look at the property.”
They look at questions such as, “How does gearing work? What are the tax implications? How should you structure your lending? How does your cashflow work? What are the out of pocket costs? We cover all of that,” Hubbard adds.
“It’s a comprehensive end-to-end solution.”
5. Counting the costs
Another consideration when investing in a new property is when people start thinking about cost and cash flow.
Beyond the purchase price, there’s stamp duty, legal fees, and conveyancing costs.
Not to mention ongoing commitments like insurance, property management fees, maintenance, and repairs.
Hubbard says these all add up and often get overlooked by budding investors.
Newer homes often need less maintanence than older properties and therefore costs are different. Picture: Getty
“That’s why we do a complete analysis of what the costs are going to be over the year, and then we help people understand the out-of-pocket contribution per week.
“Our process really turns the light on for a lot of people. It’s for everyday Australians. It’s not only for the super high-income earners. It’s accessible for those earning a reasonable income and who have equity in their home.”
6. Choose the right location
Everyone knows the golden rule of property purchasing: it’s all about location. This principle applies equally to investment properties.
That’s why Hubbard says Invest by Metricon has done the hard work researching the best investment opportunities.
“We’ve got a specific formula. We look at the top-tier developers in specific growth corridors,” explains Hubbard.
“We don’t deviate from the formula, and we don’t offer up assets that don’t fit that standard as we want our investors to be successful.”
If you’re wondering how property investment can help you to secure your financial future, talk to Invest by Metricon today and see what is possible for your circumstances.
