Housing is the largest asset class in Australia, worth north of 6.5 trillion, CoreLogic RP Data shows. That's more than double the value of all superannuation funds and more than quadruple that of all Australian listed stocks.
What's more, an estimated 15.7 per cent of Australians own investment property. For those reasons, it's no surprise that property investment in Australia has become increasingly competitive and costly. To find your way into the market it's sometimes necessary to use alternative property investment strategies and think outside the box. Today, we'll discuss a few alternative investment property strategies that will come in handy.
Rent your home, buy your Australian investment property
Just because it's the 'done thing' to buy the home you live in before you start investing in property that doesn't mean it's the best option for you. Rentvestment is a slightly unconventional investment strategy that's been gaining in popularity in Australia recently and it could be the perfect way to help hasten your climb up the property ladder.
Melton council area just out of Melbourne is a great place to look thanks to its median house value of under $300,000.
In a nutshell, it refers to renting your primary residence and buying investment properties elsewhere. In areas like Sydney and Melbourne where median home values sit near $1 million this could be particularly productive as it will allow you to rent and live near work, family and friends, where property prices may be out of reach.
You can then buy a property out of the city in fast growing but affordable areas – considering only a property's profit making potential as you search.
CoreLogic's data on last year's most affordable areas suggests that the Melton council area (just out of Melbourne) is a great place to look, thanks to its median house value of under $300,000.
Deagon in Queensland is even cheaper with a median unit value just under $123,644. By looking at more affordable suburbs you'll be able to get onto the market sooner and start building equity faster, without making too many sacrifices.
Alternative property investment: Buy out of the box
If you come up against challenges when buying investment property in Australia simply approach the problem from a different angle. That means thinking out of the box when you buy and looking at property you may not have considered before. It may be in a different location, or be a different type of property altogether.
CoreLogic's Best of the Best report suggests that the areas that grow in value aren't always the ones you expect. In fact one of the fastest growing areas in the entire country was Wyee Point: a tiny town almost an hours driving out of Newcastle. It's median property value grew by 31.7 per cent over last year to reach a very affordable $478,560.
Another suburb that's worth considering is Yayalup: a small area 219 km south of Perth. Over the five years ending September 2016 its median property value grew by a whopping 144.4 per cent. Capital gains aren't everything, but these suburbs prove that investment in unconventional locations can reap massive rewards.
Get creative with your finances
The latest data from the Australian Bureau of Statistics shows that property investors hold $12.8billion in fixed rate home loans. You can be sure that a great deal of those home loans weren't as carefully considered and personally tailored as they could have been (after all it can be fairly straight forward to pick a standardised investment loan off the shelf at your bank).
It may be quick and easy but it could also cost you serious money if your loan isn't perfectly suited to you. That's why it's always best to carry your creative approach to finding and buying property through to arranging and securing finance.
By going with a mortgage broker you'll have access to the products of dozens of lenders, as well as professional advice to help you customise your loan to your situation. These extra features may include the following useful additions and more:
- Interest only repayments.
- An offset account.
- Custom repayment timing and frequency.
- The ability to access equity.
- Loan portability
If you're considering adopting an unconventional property investment strategy, then your first step should be to organise suitable finance. For a personalised experience and the advice of experienced experts go with Mortgageport.
Unlike some banks and other large lenders we take the time to understand you and tailor an investment home loan so that it's perfectly suited to your goals and your strategy – whatever they may be. Get in touch today to get the ball rolling with your property investment aspirations.