As the situation in Victoria gets better and better, all kinds of data on the housing market have also picked up. Here are three main signs that investment property values are starting to rise. First of all, vacancy rates are falling in some areas, such as Richmond and Brunswick. Second, rents have risen slightly in some areas, such as the city of Darebin. Finally, the fall in interest rates is good news for some people who want to buy houses for investing purpose by borrowed money. In this blog post, I will outline three main considerations for investors.
1. Types of Investment Property
With the development of human lifestyle, more and more young people or young couples tend to live in an apartment or townhouse to save the trouble of tending the garden. Therefore, it is easier to find tenants by buying similar types of investment property. At the same time, as a landlord, there is no longer a need to pay additional fees such as weeding, so this kind of investment properties become the first choice to investors. Moreover, even if investors are overseas, they do not have to worry at all about things like building houses. An apartment or townhouse is not like a house where you have to find your own design and architecture firm. Most of the large developers will provide some of the refined decoration of the house, it is particularly suitable for investment housing. Finally, in most cases, the apartment or townhouse will be smaller than the house so that the rent will be lower. As a result, more tenants will be able to afford the rent, which will reduce the risk of vacancy for landlords.
2. Selection of Location of Investment Property
Judging by recent vacancies, the rate of rentals in the city centre is lower than some in the suburbs. There are two main reasons for this situation. The first is that the prices of houses in the city centre are generally high, so the rent will be correspondingly higher. The economic downturn caused by the epidemic will reduce tenants’ ability to pay, so some houses with better value will be more popular. The second reason is the psychological problems of tenants, which is that the concentration of population will greatly increase the probability of infection. Melbourne central is usually the most densely populated since there are more workplaces in the CBD. Some houses in the suburbs will solve both of these two problems. Furthermore, the lockdown for a long time makes many tenants realise the importance of activity space, so more people will buy houses with larger space at the same price. In this case, the houses in the suburbs will be more suitable for this group of people, which means that the houses in the suburbs are more suitable for investment purpose.
3. Cost-effective loan and property price
During the epidemic period, the interest rate of loans has decreased significantly, so choosing the appropriate institutional loans can save a large part of the cost of buying a house. Even if you have enough money to buy a house in full, a loan can win in terms of the liquid value. Specifically, existing funds could be invested at a higher rate of return, and a portion of the return would be used to make up for lost interest. However, it is important to note that the interest rate on deposits will fall even more, so working capital should not be invested in bank deposits. Moreover, the downturn in housing prices caused by the epidemic has not fully recovered, and some houses are still below market prices. Therefore, those who are interested in buying investment houses should seize the opportunity to invest now.
If you have enough money for a down payment and can find a below-market apartment or townhouse in the right suburb, now is the best time to buy an investment home. Contact Sightstone for more information, we are glad to help our clients and investors over the gloomy days to maximize your wealth.