If you’ve been dreaming about purchasing your own place, but a niggling voice in the back of your mind has been offering up objections, we’re here to tell that voice to pump the breaks, champ! In this article, we tackle some of the common objections first-home buyers may have to buying right now, and explain why you should talk with us today.

Will buying a smaller investment property provide a good ROI?

A small property could potentially make a great investment, provided you choose the right one. The key to success with any investment property is thorough research. In this article, we take a look at how to research and choose the right small space property to give you the investment returns you’re looking for.

Pros – why choose a small space apartment or unit?

There are lots of benefits to buying a smaller property such as an apartment or a unit. Houses often have a higher entry price point due to land value, so you could potentially buy an apartment or unit with a smaller deposit. Ongoing costs for apartments and units can be a lot less too – council rates are usually higher on a house and in many states, you’re also required to pay land tax on an ongoing basis. With a unit or apartment, costs are limited to strata and body corporate fees.

Maintenance is also a cost that must be taken into consideration. If you purchase a house, all maintenance issues are your responsibility, whereas with an apartment or unit, many of these costs are covered by the body corporate.

These factors mean that a unit or apartment may be more favourable from a cash flow perspective – which is great, particularly for first time investors. Additionally, if you do your research carefully, you could potentially locate an apartment or unit in a location set to make both great capital gains and solid rental returns.

Cons – how small is too small?

Some developments offer studio and one-bedroom apartments of less than 50sqm. Many lenders are reluctant to finance these properties, and also some small space properties in high rise, high density developments, so it pays to discuss any property you may be considering with your mortgage broker before you sign a contract or put down your deposit.

Research is the key to success.

So how do you know for sure that a location will be in high demand for small space renters in the long term? Small space apartments and units are often in high demand in locations that are close to the action for singles! These may include the city centre and other busy employment hubs, universities, areas with vibrant nightlife, or excellent public transport facilities that provide fast and easy access to these amenities. To find out what you need to know about a particular location, start by talking with local real estate agents and property managers. Essentially, you’ll want to find the answers to these questions about your chosen location:

• How is the local economy doing? Is there employment growth?
  

• What is happening that will affect supply and demand of small space property in the area in future? Are there many new developments in the pipeline?
  

• What is the historical growth of property prices in the area?
  

• What are the current rental yields on properties similar to the one you are considering?
  

• What is the median price of properties in the area?

We can also provide you with a comprehensive report on any location or suburb of interest. We have access to specialised data from Australia’s leading property market data supplier, CoreLogic that specifically targets small space apartments and units.

How to analyse the market data.

You’ll want to analyse the data you collect to find a location with positive capital growth and solid rental yields to maximise the profit potential of your investment. (If you need help, please ask us as we have a great deal of experience!) Some other good indicators of these include:

• Days on the market. How quickly do properties sell in the area?

• Vacancy rate/demand to supply ratio. Is there much competition amongst renters?

• Rental yield. What percentage of the price of the property can you collect in rent?

• Auction clearance rates. Do sellers need to reduce the price to get a sale?

• Limited available property. This could suggest that demand exceeds supply and this is likely to drive future capital growth.

Ask us to help you crunch the numbers!

There are always reasons for and against investing in any type of investment property. The right investment choice for you will depend on your financial position and investment strategy. If you’re considering in investing in property for the first time, a small unit or apartment could be a good way to start, so talk to us and we’ll help you crunch the numbers to see if they add up!

Remember, a good mortgage broker can be an invaluable resource when investing in property. We’ll help you choose the right loan that will not only serve your needs now, but set you up for further investments in the future. Talk with us today – we’d love to help you get started with a little property investment today!

How to beat the urge to splurge

Christmas is just over the horizon and decorations are already starting to appear at the local shops. It’s a time of year where it’s almost common practice to splurge! Marketers are all working hard to encourage you to buy, buy, buy and you may have already picked up a few things for yourself and to put under the tree for family and friends.

It’s easy to resort to “retail therapy” when you need a bit of a pick-me-up, and it’s also easy to overspend on gifts amidst all the excitement of Christmas. But what will really give you a thrill and a sense of satisfaction is reaching your savings goals and using the money to buy an asset that will help you grow your nest egg even further (like a house). Here are our tips for beating the urge to splurge this Christmas.

 

Establish a budget

The most valuable thing you can do for your bank balance this silly season is to create a budget and stick to it. This is especially important if you are buying Christmas gifts. 

Write down all of your income and expenses and set an amount for regular savings. Once you have a budget in place, you’ll know your spending limits, and how much you can afford to spend on things like Christmas presents or summer holidays. You’ll also be able to establish good savings habits – something that’s vitally important when the time comes to apply for a home loan. When creating your budget, set yourself short-term savings goals to stay motivated, plus long-term goals to set your sights on where you want to be financially.

There are plenty of online tools to help you create a budget. You could use a simple Excel spreadsheet or a budgeting app. Wally, for example, allows you to manually log your expenses and store pictures of receipts in a virtual budget journal. The app alerts you when you hit your savings goals or when a bill is due. TrackMyGOALS allows you to set, plan, track and manage your savings goals (we’re thinking a new home could be a goodie!).

Think outside the box

If you want to avoid splurging, you need to think outside the box and make a fun game out of finding ways to save money. The key is to challenge yourself to find ways to feel good without buying stuff you don’t really need. If you’re feeling blue and needing some “retail therapy”, do some exercise instead or head to your local park. The endorphins and fresh air will do you a world of good!

When it comes to Christmas gifts, simple home-made presents can potentially save you a load of cash. Get creative! Make some yummy treats and jazz them up with some pretty wrapping. Get a professional photo done and buy some frames in bulk at wholesale prices. Don’t be shy about ‘re-gifting’ anything you don’t need, just give it to someone else who may enjoy it. The options are endless!

Avoid temptation

It’s important to know your spending triggers and to keep them in check to avoid impulse shopping. If you’re a fan of online shopping and find yourself gravitating towards those advertisements on Facebook, perhaps take a hiatus from social media during the silly season and ‘unlike’ your favourite shopping sites. 

Similarly, if you find yourself being tempted to buy things for yourself when you’re out and about buying Christmas presents for your family, it’s wise to avoid shopping centres. After all, if you don’t see those killer shoes in the shop window, you won’t know what you’re missing out on. If you have to go out to buy Christmas gifts or essentials like groceries, write yourself a shopping list and take cash with you. By keeping your credit cards safe from yourself (and locked in a drawer at home), you’ll spare yourself a spending hangover. 

If you’d like to explore your home loan options, we’d love to hear from you. Even if you don’t have a huge deposit saved, we may still be able to help you, so please don’t hesitate to get in touch. Remember, you’ll need a good savings history if you are planning to buy a property, so resist the urge to splurge this Christmas! Make some savings goals, change your spending habits and set the wheels in motion for a splurge-free future today!

This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. This article does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.