A ‘safe as houses asset’
Real Estate is somewhat of a ‘protected species’ in Australia as it is Government backed, supported by a host of policies that allow property to continue to rise in value over time.
An example of this is the Government's response to the recent economic fallout following COVID. Effectively, Federal Government programs in conjunction with monetary policy acted quickly to put a floor under house prices.
Our passion for property was again evident recently with the 2019 Federal Election ultimately fought over maintaining negative gearing policy for property investors. A victory that demonstrated our long-held Australian value of property ownership still stands.
Also, thanks largely to net overseas migration on the back of Australia’s immigration policy, our population keeps rising, which helps boost the Australian economy and adds to housing demand.
Entering the property market in Australia
We’ve long heard that the great Australian dream is to own your own home. When new migrants come to Australia, they buy to establish themselves financially and as a part of the broader community.
Over the past few decades, however, a new dynamic relating to first homebuyers has emerged in Australia, known as rentvesting. Rentvesting, as an investment strategy, is where you buy where you can afford and rent where you want to live. In Sydney and Melbourne, where house prices have risen to such an extent, pricing many people out of the market, rentvesting has gained popularity.
Rentvesting provides the best of both worlds where new property buyers can live the lifestyle of their choosing and at the same time build a nest egg through investment-grade real estate in Australia.
Buying one property, two properties, three properties, more
Despite the obvious benefits of buying property investments in Australia, most investors never get past one property. According to the ATO, there are approximately 2 million property investors in Australia. This means that only 16% of the population own an investment property.
Of those who do own an investment property, most only own the one. Less than 5% of property investors own more than five properties, with 90% owning only 1-2 properties. Often, investors cannot continue building up a large property portfolio because they can’t borrow more money after their first 1-2 purchases. This is sometimes because the properties themselves have not performed or they have purchased negatively geared properties that have weighed down their serviceability.
If your goal is to build a large property portfolio and potentially even generate passive income to live off, you must purchase properties in the correct order. You need a combination of growth and high yield to allow you to continue to scale up and buy more properties. Most people simply don’t have the understanding of how to do this.
This is where a Buyers Agent can dramatically improve your trajectory when you begin buying property as an investor. A Buyers Agent can not only help you identify properties that are primed for growth but also help with you to build a portfolio in such a way that you won’t run into the glass ceiling of serviceability that holds back so many investors.