Our Co-Founder Mickael Rogers recently sat down with Rebecca Maher, Managing Director of MoneyHappy to discuss his biggest lessons and predictions for investing in property this year.
We’ve summarised their full discussion into these 5 points to give you the insight scoop in just a few points.
1. Property is a faster way to grow wealth compared to shares
Those new to growing wealth through investing may be wondering if it’s a safer bet to invest your hard earned cash into share or into property. But we’ve got the answer to this age old discussion.
New tools like AI and machine learning are giving investors the power to research into the stock market and property market like never before, and it’s also giving us the ability to tap into trends and insights from years of accumulated data.
Despite the peaks and troughs in prices in the housing market, it’s still a safer and more tangible bet than investing in shares.
Believe it or not, the stock market is more volatile than the housing market and we’ve seen worldwide instances where small changes in stock prices have caused investors to lose everything.
On top of this, investing in stocks may deliver a good return over time but they do not deliver increased monthly cash flows as property investments do. As soon as you settle a property and rent it out to a tenant, you can begin to generate income. This is immediate. And it makes a massive impact to families bottom line all across Australia.
2. Many barriers to entering the property market are location based
Before we begin with this point, please note: We are not trying to belittle anyone’s personal financial situation or budget. We know there are barriers to entering the property market, and PropHero is here to help take those barriers down for the everyday investor.
When it comes to a lot of the discussion around barriers to entry, 99% of the time the discussion focuses on the fact that many people can’t afford to buy in high growth capital cities like Sydney and Melbourne.
Want to know a little secret though? Some of the best property markets out there are cheap – but they are not in Sydney or Melbourne.
Investors need to make a choice about whether they want to own a more expensive property that they can live in, in their own city. Or invest in multiply properties that aren’t in their hometown with the idea that one day they will earn the capital to invest in a property of their own.
Buying property is a big decision and everyone’s situation is different. But at PropHero, we believe investing in property is becoming democratised to the market becoming more open minded about purchasing properties in different states.
3. Rentvesting has opened up new opportunities for under 30s and the middle class
There’s been a trend over the last few years where under 30s and middle class investors have made the conscious decision to rent the property where they live, while they save for investment properties elsewhere.
It may sound weird, but this strategy does allow under 30s and middle class investors to get into the market sooner compared to if they decided to purchase a property they wanted to occupy.
Rentvesting could mean that the property investment covers majority of their rent. Which enables smart investors to save for additional properties faster.
4. Due diligence is key when purchasing a new property
Buying a property is an emotional event for many investors. And in some devastating cases, emotional property purchases have lead to catastrophic property damage through floods and fires, and massive increases in insurance premium costs.
Due diligence is so critical. At PropHero, we check every property we purchase across 200 parameters to ensure the property will not lose value due to climate change, noise, or even potential future infrastructure projects.
Every year, we assess 18,000 properties, but we only purchase 500. This is because due diligence is such a massive factor for us. If you’d like to find out more about this, you can chat with our team here.
5. New property projects will create a supply and demand imbalance in the future
A lot of people make the mistake of thinking that purchasing a new property off the plan is better than purchasing an older house.
The problem with buying off the plan is that many of these properties are located in areas where hundred or even thousands of new properties will be built in the future.
This means that these areas will experience a massive imbalance between supply and demand which will drive down property prices and rental values.
New isn’t always better. And in this case, we couldn’t agree more.
And that’s it! If you want to learn more about any of these points we discussed, you can book a free 30 minute strategy session with our team anytime.