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Should you buy ANY property?

Oktay Sengoz

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25/10/2022

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1 min read

When the property markets in capital cities are going strong, markets all over Australia usually tag a long for the ride. Regional towns, coastal towns and tourist areas are benefiting of the ripple effect of the growth in capital cities. All of a sudden any property starts looking like a great investment. But does that mean it is?

When most people see how much property prices are in their capital city, they tend to think it’s too expensive to buy and buying in regional areas for a lower amount makes more sense, especially if rental yields are higher. This gives most people comfort knowing that they don’t have to spend so much to buy a property and they don’t miss out. FOMO at its best.

So, if all you can service is enough to buy a property in a regional town, should you just buy one? Short answer is No.

Let me tell you why

This purchase could potentially cost you money in the future. How?

Minimal or no capital growth. Why are people rushing to buy in Sydney? its because they are getting great rental yields, in fact Sydney’s rental yields are probably the lowest in the country, but we know a property in Sydney is grow in value. Thats what people are buying.

So what do you get if you don't get capital growth? Rental yields.

Yes the rent you receive may cover your mortgage now, but what about when rates go up? Generally rental returns are higher in areas that are dominated by investors.

The demographic of the local people may not be the same as what you expect in Sydney.

Time and time again we have seen customers who have purchased in regional towns and have struggled with tenants. I’ve experienced this first hand with a property we had in the central coast, which we have since sold for this reason.

The cost of the opportunity to buy a property you want to live in in the future

This purchase could set you back years in your goal of buying an owner occupied property, it will impact your servicing on the loan and you may even find yourself in a negative equity position with your investment property.

The best time to buy property is when you are ready, if you are not ready, then don't just buy for the sake of buying. Let us help you come up with a strategy to help you the buy the right property. You have to follow the simple rule of buying good property in good locations at a fair market price.

Talk to us today to see if it’s the best time for you to buy property

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