Is now a good time to buy an investment property?
Investment properties can help you build wealth. But how do you know when it’s the right time to get started? Both new and current investors often have questions about when they should purchase their next property. We’ll explore whether there is ever a ‘best’ time to purchase. We’ve also got some tips for getting started.
When is the best time to invest in property?
Some investors often wait for the bottom of the property cycle so they can secure a bargain. The problem with this approach is no one can know for certain when this is. As a result, you could end up missing out on great opportunities and fail to secure a property at all. You'll never be sure if prices will go lower and you end up waiting and waiting and waiting. Before you know it, the market is on the upward trend again.
Timing the market is impossible
So while timing is important to a point, it isn't the key to property investment success. Most experts say you should simply buy when you can afford to.
As the old saying goes, the best time to buy property was 20 years ago and the second best time to buy is today.
In short, you probably should buy when you're ready. Our experienced brokers can help you figure out if now is the right time for you and if it’s not, they can assist with getting a plan in place, so you’re ready in the future.
Opportunities in a softer market and in Australia’s multiple markets
In addition, the market rarely, if ever, has perfect conditions. We’re all looking for high capital growth, low rates, high yields, lots of supply, and ease of borrowing. To make things a little more complicated, Australia doesn't have a uniform property market but multiple markets with different characteristics. In some markets, you could have high growth while others are much weaker. Do your research beforehand, to make sure you’re purchasing in the right market for you.
So if you can find a property that meets your criteria at a price you can manage, it's probably a good time to buy.
Seasonal trends could have a mild but nevertheless fairly important impact on your purchase price, so you might want to factor seasons into your timing. For example, spring is the busiest period for sellers and tends to see higher prices. Summer is also associated with higher demand and prices. Autumn could see slightly lower prices due to less competition between purchasers, and winter might be the best season for securing a lower price because of less competition.
Top tips on how to get started in property investment
Getting started in property investment isn't as intimidating as it might seem. If you've always wanted to start building wealth through owning property, consider the following strategies to help you get started.
- Do the numbers - Don't assume you can't afford one. Go over your income and expenses to work out what you can afford. Research whether you could secure a loan, and remember, you might be able to use the existing equity you have in your family home to help with your deposit. Understand risk levels and what level of risk you're comfortable with, and get informed about gearing, tax, expenses, and other important considerations.
- Get pre-approval - Work with a trusted mortgage broker to apply for preapproval for a loan. You'll need to have pre-approval before negotiating on property prices or making an offer to buy.
- Know what you want - Clarify your goals and consider what you're looking to achieve, whether it's building wealth for retirement or financial security for your family. Know what success looks like for you, so your strategy matches your goals.
- Have a plan - Have a budget and purchase plan so you can stay focused on what you need to do to achieve your goals.
Getting off on the right foot by seeking mortgage advice
While the property market tends to move through a cycle, it can be impossible to time the market. A better approach could be buying when you find the right property at a price you can manage. Instead of waiting to buy at the bottom of the cycle, look for property with high capital growth potential and go from there. The earlier you get started, the more time you'll have to realise capital growth and accelerate your portfolio value. When getting started, always do your due diligence and collaborate with experts such as our mortgage brokers to ensure you get the right loan for you.
Loan Market is a family owned, Australian company with over 20 years of experience in the home loan industry. We know home loans can be incredible complicated, so our multi-award-winning team will work to help you secure the right loan without the fuss. To find out more about how we can assist you with the right loan for your investment property, contact us today.