What are the biggest misconceptions investors have about Australia’s property market?
MFS investment property is one of the hottest investments in Australia, with new deals regularly being announced in Sydney and Melbourne.
And there are many misconceptions about the market that can affect the buying process, particularly in the last few months of a property sale.
The biggest misconception investors have is that investors can get a loan on the property, said MFS Investment Management director of research and consultancy Andrew Worsley.
“We’ve been seeing a lot of new projects come in, so that’s the big thing for investors.
They are buying for the first time and they want to see where they stand,” Mr Worsly said.”
The other big misconception is that if you buy from a property dealer they’ll just pay you what they can get from the banks, and they won’t even ask you to deposit anything, they just want to buy it.”
That’s what they’re used to, they want the same thing, but they don’t have any knowledge of what is really going on in the market.
“If you get into this market, you’re getting into a world of uncertainty.”
There’s no guarantee in a market, so when you buy you are in a situation where you need to take on risk and the markets are unpredictable.
“You need to know how the market is going to behave and how the property market will behave.”
While many buyers are in the know about the mortgage, the other big mistake many investors make is buying at an inflated price.
“People are always asking how much a property is going for,” Mr Laughlin said.
“It is going up and down all the time, but you can get away with it because the mortgage will be there and they can pay you whatever they want.”
In some cases, you can pay the mortgage and then buy the property and the mortgage is just going to be deducted from the price you’re buying.
“For example, a property might go for $400,000, so you’ll have to pay the entire mortgage, but it might be worth $1.5 million to get the same property at $300,000.
It’s just a case of how much is the mortgage going to go up or down.”
Mr Worsl said many buyers were in the business of renting out their property for a while, but then decide they don ‘t want to be a landlord anymore, so they’re moving into the investment market.
He said the first rule of investing is to know what you want.
“The first thing you need is to be sure you want the property for what you’re putting money into.
It can be a good idea to check whether you’re in the middle of a long term mortgage or a property-related one, because that will help you decide whether you want to go back to renting,” Mr Karpel said.
The second thing to check is if the property is in a good state of repair, or if there are any problems with the property.
“I’ve seen quite a few properties in good condition, but some of them are quite expensive,” Mr Hird said.
Mr Laughlin also recommends checking if the properties you’re interested in are affordable and suitable for your lifestyle.
“Look at the property’s financial situation, if it’s affordable, you should consider going for it,” Mr Moustakas said.
Topics:business-economics-and-finance,investment,property-market,investor-relations,industry,property,industries-and and-entertainment,australiaFirst posted April 21, 2020 09:15:56More stories from Western Australia