Common myths that stop you investing in property
When it comes to property investment, there are many myths about the place which suggest that only the rich can afford to invest in property or that it’s just dumb luck that’s got them to where they are today. These myths however, are just myths and hold no truth, but there are still many people out there today who listen to these myths and gossip around them which stops them from buying property.
To help pinpoint some of these common misconceptions, here are some of the more familiar myths that stop people from investing.
1) You can only invest if you are rich and have money One of the commonest beliefs is that “you can only invest if you are rich or have money”. There is some truth behind this, as you do need some money to enter an investment, but those on an average wage can afford to buy an investment property – it’s not just the super rich. This can be done in several ways, such as using the equity in your existing home, or turning to your savings and creating a strict savings plan to reach your deposit.
2) Debt is bad There are actually two types of debt: good debt and bad debt. Good debt is the type of debt that you buy appreciating assets with, such as property and is used for long term gains, whilst bad debt is used to purchase depreciating items that don’t produce an income and lose value over time such as a car and TV. You should try to limit your bad debt and understand that buying the right property can actually make you money in the longer term.
3) Lack of time It’s the common saying today that there aren’t enough hours in the day to get things done. However, having a job, kids or a busy schedule is not an excuse for not investing in property. You can easily make time to spend a few hours researching a suburb or coming into the office to speak to the iBuyNew team where we have already done the research and can pinpoint the right projects that will suit you.
4) Property is risky Of course, there is always some element of risk whenever you take out an investment, whether it is property, shares of bonds. However, property is actually one of the less volatile options and one of the safer investments, compared to shares which can be extremely volatile as you have limited control over these.
5) You should only buy close to the CBD Many people believe that the only place you should be buying is close to the CBD. What you should actually be looking for is high growth suburbs, which might not necessarily be near the CBD. This suburb should have amenities including schools, transport options, shops and parks to be desirable for your tenants and ideally should have a high demand and low supply.
6) Too much competition During certain periods of the property clock there may be times when there is a lot of competition which can stop you from purchasing property. However, the secret is not to follow the crowd, you need to get in first and if you have the funds available for a deposit then now is the right time for you to purchase property, rather than waiting for a bargain to appear.
As well as myths stopping you from buying, you should be wary of a myth that suggests:
1) All property doubles in value Depending on the location of the property and the property type will determine whether the value increases. Not all property will double in value. Usually, those closer to the CBD within a 10km radius will see an increase as well as those in high growth suburbs or neighbouring suburbs, whilst a property that might be in the middle of nowhere, close to no amenities and transport options might not see an increase. It therefore pays to do your homework.
If you’ve been listening to these myths then it’s time to sit down, re-think and understand that property investment can be achieved if you’ve got some money behind you and the willingness to proceed. There are many advantages available for investors including tax advantages and bringing in a rental income that makes property investing attractive.
If you’d like to discuss more about property investment and how you can achieve this then please feel free to contact me using the enquiry form online, or by calling 1300 123 463.
Published on 8th of January 2015 by Marty Stanowich