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Rule of thumb for first-time property investors

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Rule of thumb for first-time property investors

by Cameron Micallef 26 October 2020 1 minute read

Australians looking to break into the property market are being advised to do their research, speak to professionals and use debt in the right way to accumulate assets.

Rule of thumb for first-time property investors
October 26, 2020

In a conversation with Smart Property Investment’s sister brand nestegg, Minnik Chartered Accountants director and wealth educator Leah Oliver pointed out her tips for new investors.

“In this area, there’s often confusion between a viable investment and an extension of one’s lifestyle. We see emotion creep into the equation quite often,” she said.

Ms Oliver tells novice investors that the value in property is the land and not the building on top of it.

With that in mind, the wealth educator said, “Avoid units and structures where you share with others and don’t own the land.”

She also told investors to do their research in an area before committing to buying.

“Forget investments where there is low demand and oversupply, this destabilises their value and makes them high risk,” Ms Oliver said.

Ms Oliver also told first-time property investors to avoid purchasing a property purely for negative gearing purposes.

“Capital growth is your highest priority. Rental return is secondary. Tax savings are last. Never make investment decisions primarily for tax savings (with a few circumstantial exceptions),” she said.

She also reminded investors that Australian real estate tends to be a strong performing asset class, although investors should only purchase what they can afford.

“Investment properties that tend to perform well are where the purchase price is right, the buyer doesn’t overextend, the property is freestanding and in a location that offers adequate employment, industry and infrastructure,” Ms Oliver said.

“Aged cottages on nice sizable flat blocks, low maintenance in a location that has everything to offer, are a favourite. A cosmetic lift can go a long way with these kinds of additions.”

The wealth educator also advised those who can pay a little more and get out of debt sooner to do so.

“Never sit on a mortgage paying down minimum only to remain geared for tax savings. Be dedicated to paying down debt always,” she said.

Rule of thumb for first-time property investors
Rule of thumb for first-time property investors
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About the author

Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your... Read more

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