How to Invest in Australian Property Even with a Low Income

Real estate investing is a pipe dream for many aspiring investors. After all, buying a property is unlike any other shopping escapade, right? The price to pay is high, not to mention it is a long-term commitment that requires years of budget discipline and saving.

However, while investing in a flashy, beachside house might be out of your reach right now, you can definitely find an affordable option for you if you have enough money for the deposit and can prove that you can afford to get a loan. Yes, a low income does not mean you cannot pay for that dream home. Give it a shot and you might be surprised at what you can borrow and what you can afford to do.

Of course, you have to think creatively about it.

Focus on Profit Not on Property

 Often, when told that they can only borrow limited amount of money, low-income property investors in Australia set a limit on the type of homes they can buy—mostly the really cheap ones.

If the reason you invest in Australian property is to build wealth, your concern should be whether a profitable deal is possible for you and, if not, what you could possibly do to achieve it. Also, don’t judge a property’s profit potential based on face value. In other words, avoid making an assumption that just because a certain house is bigger than the other then it will earn higher and, therefore, it’s what you should be buying.

“That is one of the biggest mistakes: too many people go searching for a property rather than for a profit. It is important that they distinguish one from the other. Because you could be investing in a shack and making more profit than someone investing in a four-bedroom house”, said Yza Canja from Property Rocket.

Prove You’re a Saver

 There are many ways to get a bank approve your loan, and among which is to prove that you have genuinely saved at least 10% of the property’s cost.

A steady saving pattern of over six months or a year helps you prove to lenders that you are good with handling your finances and that you are disciplined when it comes to saving.  Majority of Australian banks have their books comprise mostly of home loans, and they will be more than glad to fund a financially responsible homebuyer.

Determine Your Borrowing Capacity

The first thing any aspiring property investor in Australia should do is to compute their borrowing capacity. A home loan could mean 15 to 25 years of financial obligation—a certain deduction to your monthly income. Are you financially ready for this responsibility? Try to do the math.

You can use ASIC’s mortgage calculator to determine how much your repayments will be as well as get an idea how you can repay your loan sooner.

Choose a Creative Investment Strategy

Let’s face it, the monthly repayment can be quite costly. But you can easily deal with this financial responsibility using some creative property investment strategy.

One option that might work for you is the buy, live in, improve and sell strategy. This entails moving into a place, doing some minor renovations or improvements (mostly cosmetics) and then selling the house at your convenience. You don’t have to sell quickly, because your goal is to sell at a profit. This is by far the easiest way to create an investment portfolio and build wealth in property.

Understanding the Property Cycle – 3 Steps to Knowing When to Invest in Australian Property

Planning to invest in an Australian property? One factor that plays a key role to your success is market timing, which when combined with a well thought-out, long-term strategy, sets you right into achieving your investment dreams.

The following are three techniques that will help you understand the property cycle and help you determine when is the right to buy or sell a property in Australia.

Research About the Past

 A cycle can last for about seven years with a slowdown and flattening of property prices averaging from 3 to 3.5 years. This is followed by another 3.5 years of rising prices—the peak of which can last only for a very short time until the price slump starts.

Familiarise the Triggers

If you are planning to invest in Australian property, understand that many factors can affect the prices. The most obvious of which is interest rates. When these go down, it is your cue to buy. Banks and lenders are giving friendly rates, making homeownership affordable for everyone. When interest rates start to rise, on the other hand, expect prices to shoot up sharply. It is an indicator that there is higher demand than supply.

Another key signs are migration and economic data. If these two trend positively, then it is an indicator that the real estate market is entering the boom phrase or the growth phase and that the country is well positioned for investment.

Look at the Future

Australia’s property market is currently enjoying strong growth, with Australian housing now the most expensive among developed countries. Some experts predict this growth is still far from over and will likely to continue in a few more years.

The whole point is, if you are looking to buy a property in Australia, consider the whole market’s future growth, including it infrastructure development planned, employment rate, income level and so on.

So, these are the three steps to understanding the property cycle and knowing when is the best time to take a leap. For more tips and advice, contact us  and sign up to receive our free e-book.