One question we get asked a lot is ‘is now a good time to buy an investment property’?

With record low interest rates, mortgage deals to be had, and government grants available, yes, we strongly believe now is a good time to buy.

But with COVID bringing a degree of economic uncertainty into the equation, and media predicting the market will crash, many are arguing that you should wait. However, the market may not crash, and indeed, property prices may rise and currently are across most areas of Newcastle.

The truth is, you could be waiting for ‘that right time to buy’ for quite some time. Another thing to remember is, unlike other forms of investment, property usually survives economic rough times after all, we all need somewhere to live.

So how do you decide when is a good time to buy?

When it comes to the right time to buy an investment property, it’s not just about external influences, it’s actually about you – what’s right for you and what will work for you.

Let’s go back to basics and look at some of the things you need to do.

Get your property mojo

There’s always a reason not to do something, particularly if it requires a bit more thought and attention. Start with thinking about what you want in five, ten or even 20 years from now. Thinking long term will help keep you focused and give you the motivation to work out how you’re going to use property investment get there.

Know your finances

Knowing what is coming in and what is going out, and most importantly, what is left over at the end of the month is essential.

If you are in a stable and reasonably good paying job and have a solid employment history, the chances are you can borrow money.

Furthermore, comprehensive credit reporting means financial institutions have a clearer picture of a person’s ability to pay a loan because both the positive and the negative aspects of your credit history is included. So, even if you’re a contractor, the chances are there will be a lender who will offer good rates for people who show good fiscal judgement.

When you know your finances, you’ll be in a position to speak to your bank or an independent mortgage specialist who can then tell you how much you can borrow.

Work out your budgets

• Buying costs

Once you know what you can borrow, you can then work out your buying budget. This will include costs such as stamp duty, searches, inspections and legal costs.

• Ongoing costs

While you will always have your mortgage interest rates to factor in, ongoing costs (property management fees, council rates, maintenance and repairs) will be dependent on the type of property you’re considering buying.

• Reducing risk

Most importantly, you’ll need to think about how much of a buffer you’ll need in your budget to account for any rental vacancy periods, maintenance and repairs.

Consider your strategy

Your property investment strategy is usually dependent on what your long-term goals and aims are.

Two common strategies are:

• Earn an income

Many investors finance their investment so they receive an income from their property by rental return – ie the income from the rent is more than the cost of running the property.

• Capital gains

As property usually increases in value over time, you can either sell the property and pocket the gains (although capital gains tax will need to be factored in), or use the property as equity, take out another loan and buy another property for investment purposes.

Be focused but flexible

The next step is to start looking for a property which ticks your boxes, but it’s always worth being flexible in your approach. For instance, a fancy 2-bedroomed apartment in a desirable area may not offer the same returns as a 2-bedroomed house a couple of suburbs along.

As one of Newcastle’s longest established real estate offices, we know property. Whether it is from an investment or homeowner’s point of view, we’re always looking at innovative ways to help you get the best from your asset.

Drop into the Cardiff office or give us a call on 02 4956 9777. Or send us an email to: mail@newcastlepropertymanagement.com.au