Johnson Property Group

Hot market the perfect time for virgin investors to strike

A new style of investor has learned how to enter the hot West Australian market when many may have been deterred by the pace. These super-charged conditions can be daunting to inexperienced investors, but it’s actually the perfect time to strike. The strong housing market does mean higher prices, but it also means investment properties are easily rented.

This new category of investor is young and keen to put their foot on something while
continuing to enjoy their existing lifestyle and all the accompanying toys and freedoms.
These Gen Ys and Gen Zs have discovered that this changing market has provided them a new opportunity to secure something that may have long been considered beyond their reach. Now they can afford to get a foot in the door without the commitment to settling down. This can come down the track.

There are the usual checks on income, credit, assets, cash and liabilities. It’s also essential
right at the start to find out what their appetite is for risk. This can mean these first-time
investors can have a realistic budget of between $350 and $600K.

It’s also relevant to decide if the purchase will be a five or 10 year “play”. As a buyer’s
advocate and real estate agent it is crucial for me and my team to have this information
before we explore prospective investment properties. As soon a mortgage broker has confirmed borrowing capacity, this wealth creation journey can begin.

These new types of investors were around pre-pandemic but their numbers have increased as more in the demographic embrace this path to home ownership. In addition to the common-sense value of owning a property for the future, other conditions such as an overheated stock market and high incomes in the mining sector have contributed.

I have a 24-year-old client who as an engineer working fly-in fly-out and on an annual
income of $165K. He was reluctant to give up his carefree lifestyle and the fruits of his
labour but he did want to develop some sort of plan to secure his future. Two years ago he bought his first property and he has just decided to buy another.

These younger clients also find value in using a buyer’s advocate to secure the right sort of property. This service has become even more important because stock levels are so low. Knowing what you’re doing in terms of development sites and rental feasibility is crucial to making this strategy work.

Establishing a market footprint now is the perfect solution for someone who wants to hedge against price increases, but does not want to live in the property short-term. This method allows them to secure a position, have a tenant pay off their mortgage and create equity for their future.

It might not be the traditional way of investing in Australia, but it’s certainly becoming the new normal.