The current real estate market can be intimidating for first-home buyers and new investors who are keen to buy with newly-arranged finance.
As an experienced real estate agency in your area, we always caution first-time buyers and investors against over-exuberance.
It is wise to avoid being held hostage to FOMO; the fear of missing out. So we have come up with a list of issues to consider on your property journey.
If you weigh up all the challenges, such as servicing a mortgage, buying a property may be one of the best purchases you’ll ever make.
Easy entry
Be careful when deciding where you wish to buy. Trying to track down the cheapest suburbs gives you a lower point of entry into the property market, but it has risks attached. Values can be slow to climb and irrationally quick to fall in a sober market.
Going negative
Owing more money on your property than it’s worth is a dangerous place to be. This is called “negative equity”. It’s fine if you’re able to keep up the loan repayments. However, if you need to sell quickly, you could be in trouble.
Mum and dad
Their guarantee of your loan will prevent you from having to pay Mortgage Lenders’ Insurance, which is a significant saving. But what happens if you lose your job and default on the loan. Sometimes, money and family are like oil and water. So, think carefully and seek legal advice before taking this path.
Friendly advice
Don’t let friends overly influence your decisions. They may be well-meaning, but they don’t necessarily understand your life goals and wealth ambitions. Ultimately, the decision to invest in property lies with you, not friends or family.
Trend-spotting
Trying to predict the next hot suburb is a tricky business. Gentrification of areas pays dividends for owners if they buy early in the cycle. But, if you get your choice wrong, you’ll find yourself with a property that could be hard to sell or lease.
Tax reality
Despite what you might hear about negative gearing, buying an investment property isn’t a tax lurk. It’s a big-dollar strategy that enables you to minimise tax on your income. Some facets of ownership are deductible, while others must be amortised over several years. Talk to an accountant before becoming a landlord, so you understand what you’re getting yourself into.