I am sure that you have heard dozens of reports about how hard it is for young people to get into the market these days.
I have definitely noticed a drop off in first home buyers. However, I have also seen a lot of young people buying investment properties instead.
Many people will remember this was a common practice before Governments started splashing grants around.
The upside of buying an investment property is the rental income that can help you meet the loan repayment commitments.
It is also worth noting that in most cases, the interest on an investment loan is tax-deductible. This benefit, otherwise known as “negative gearing”, can also ease the cashflow strain on young investors.
The trick is knowing where to buy and where you will get the best capital growth and a decent rental income.
One of the tools that I use to guide my clients in the right direction is the Residex Predictions Report. I like Residex because they are one of the only organisations that forecast. Plenty of property analysts show past performance but very few look forward.
Take the latest report that I have purchased as an example. This report shows 50 Sydney and Regional areas in NSW that currently have a median house price under $500,000. The top area is shown below.
Residex are estimating that Queanbeyan could grow by 50% from $477,000 to around $715,500 by April 2020 and 80%, approximately $858,600 by April 2023.
It is also worth noting that the median rental yield is 4.84% p.a.. I have a number of mortgage products that have 5 year fixed interest rates that are less than this rental yield! In other words, the loan repayments could be less than the ret you receive.
If Queanbeyan doesn’t appeal, there are 29 other areas where Residex estimate similar capital returns.
Due to copyright restrictions, I cannot sent this report to you. However, if you know someone that is looking to get into the market, I can show them the report at a meeting. Alternatively you can buy your own report by clicking this link http://www.residex.com.au/.