When is a good time to start property investing?
Learn when it’s the right time to invest in property, what to consider before jumping in, and how to start with confidence, whether you’re new or experienced.
From providing a steady stream of passive income to capital growth and offering tax advantages, there’s a stack of reasons why investors like to add a property or two to their investment portfolio.
But when it comes to property investment, the trick to maximising your returns often lies in when you enter the market.
Follow our guide to help you find the best time to buy an investment property.
When should I start property investing?
When it comes to picking the prime time to purchase an investment property, there are no hard and fast rules.
Instead, finding the right time comes down to your financial circumstances, the market conditions and your investment goals. Ultimately, you want to make sure you’re in a position to be able to comfortably afford to buy and maintain an investment property. But snagging a property at a good price never hurt either…
Before you get stuck into analysing whether or not now is the time to invest in property, it’s important to first understand what your long-term financial goals are. Are you looking to generate rental yield or are you aiming for capital growth?
By understanding your goals and objectives, you can find an investment strategy that works for you, which will ultimately help to guide your decision-making. With that said, here are 5 important factors that you should consider if you’re trying to find the best time to invest in property.
Your financial position
One of the most important factors to consider before investing in property is whether or not you can actually afford to do so. Even if all the other factors indicate that it’s an ideal time to invest, there’s not much point in getting the ball rolling if you don’t have the funds to follow through with it.
When it comes to reviewing your financial position, there are a few points to consider, like your income, expenses and debts. As it so happens, these are also some of the main factors that banks and lenders will assess when it comes to determining your borrowing power and whether you’re a suitable candidate for a home loan.
Essentially, you’ll want to make sure you’ve got a stable job and a steady stream of income. You’ll also want to do your best to minimise your debt and practice responsible spending habits.
You can read more about the factors that impact your borrowing power. Otherwise, you can use our borrowing power calculator to get a better idea of how much you might be able to borrow. From here on out, all the other factors are outside of your control.
Market conditions
The property market is cyclical. It goes through periods of growth, stability, and decline.
If you’re looking to get your foot in the door of the property market, it’s often worth trying to buy during a downturn to take advantage of lower property prices. But that’s not to say you shouldn’t pull the trigger on an investment property during periods of growth if you’re in a position to buy.
Ultimately, you need to do your research on the real estate market conditions. Keep an eye out for signs of growth and increasing property prices. But remember, just because one area is experiencing growth doesn’t mean that everywhere is.
Future developments
More often than not, property investment is a long-term game, so it’s important to consider the current market conditions as well as the potential for future growth.
If you’re interested in an area, it can be worth looking into future infrastructure developments. These types of developments can help to improve an area and potentially lead to capital growth later down the track.
Interest rates
Interest rates are constantly fluctuating which then impacts the cost of borrowing money to purchase an investment property.
When interest rates are low, it means that borrowing costs are lower, which could potentially increase your return on investment, making it a more appealing time to buy.
On the flip side, higher interest rates lead to higher borrowing costs, which could make it more difficult to enter into the property market.
With that said, it’s also worth looking at the overall economic conditions in Australia. A stable and growing economy often correlates with a healthy real estate market.
Rental market strength
For many property investors, rental yield is a key factor in their decision to invest, so keep your eyes peeled for areas with high rental demand.
If you’re planning on following the rental yield route yourself, look for areas with low vacancy rates and high rental yields. It can also help to do your research on the rental market demographics. This can help guide you in your choice of property.
By purchasing an investment property that appeals to the local tenant pool, you’re more likely to have better luck renting it out. A property in good condition with modern features, good security and energy efficiency is often more appealing to tenants. It’s also worth looking at its proximity to amenities, like public transport, schools, and shopping centres.
When it comes to property investment, there’s no right or wrong time but rather whenever you’re good and ready. Ultimately, your investment decisions should align with your overall financial plan and goals. Investing in property doesn’t come without risk, so it’s important to do your research before making any investment decisions.
You might even want to consider consulting with a financial advisor, mortgage broker or tax accountant for more tailored advice based on your circumstances.
If you’re looking to refinance your home loan to fund your investment property, check your eligibility or apply for an Unloan home loan today.
Unloan is a division of Commonwealth Bank of Australia.
Applications are subject to credit approval, satisfactory security and you must have a minimum 10% deposit or 10% equity in the property (LVR below 90%). Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. You cannot borrow more than $2,000,000 of above 80% LVR loans. In some cases depending on the property’s location or type, we may only be able to lend you up to 70%.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan. The loyalty discount is applied to your variable rate at the relevant time, and this rate may increase or decrease over your loan term. For more information view our rates and features.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Unloan is a division of Commonwealth Bank of Australia, and Commonwealth Bank does not provide tax (financial) advice under the Tax Agent Services Act 2009 (Cth). You should consider seeking independent tax advice from a registered tax agent, accountant or adviser before you make any decisions based on this information.
Applications are subject to credit approval, satisfactory security and you must have a minimum 10% deposit or 10% equity in the property (LVR below 90%). Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. You cannot borrow more than $2,000,000 of above 80% LVR loans. In some cases depending on the property’s location or type, we may only be able to lend you up to 70%.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan. The loyalty discount is applied to your variable rate at the relevant time, and this rate may increase or decrease over your loan term. For more information view our rates and features.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions are found on our Unloan Terms and Conditions. Modified Terms and Conditions will be set out in our Notice of Variation Agreement, if you are approved. This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan. The loyalty discount is applied to your variable rate at the relevant time, and this rate may increase or decrease over your loan term. For more information view our rates and features.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
