The wisdom of buying an investment property for under $500,000

24 APR 2017 By Paul Bennion 8 min read Investor Strategy

In most capital cities of Australia, apart from Melbourne and Sydney, there is still a plentiful supply of properties under $500,000 for sale.

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These capital cities include Brisbane, Perth, Adelaide and Hobart, as well as major regional centres such as the Gold Coast in Queensland and Bunbury in Western Australia.

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Perth, for example, is now a property investors’ paradise, with many properties located within a 20- kilometre radius of the CBD and listed for sale for under $500,000. This is around half the median house price of Sydney. Properties in these competitively priced capital cities offer a low-risk entry into the property market with the potential for capital growth.

It is especially important that first-time investors take a conservative approach to their property investment purchase and focus on buying an investment property for under $500,000.

Too many first-time investors over-expose themselves financially by purchasing an expensive investment property which can limit their ability to buy multiple properties. This is particularly the case if they purchase an expensive property in the wrong location, potentially resulting in a financial nightmare.

In contrast, buying a lower-priced property that has the potential for strong capital growth can be an important building block to establishing a successful property portfolio.

Lower-priced properties also tend to have higher rental returns and this factor is important during a climate of rising interest rates, with the major banks increasing interest rates for investors over recent months.

Issues you should consider when buying a lower-priced property include:

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