The beginners guide to property investment

Starting off in investment can be a confusing business, but there are few basic questions that every budding property buyer needs to ask themselves before starting to look at their options in home loans. Here are two to get you started:

House vs unit

You can't talk about investing in property without discussing the differences between units and houses. In basic terms, units tend to be focused in dense urban areas and may have good capital growth as a result of their proximity to city amenities, while houses are larger but tend to be in more suburban or regional locales. Each can have a different general tenancy pool; students and young people for units, sometimes downsizers, families and larger groups of students for houses.

Depending on the area, you may also find that the different dwellings accrue value at different rates as well. Melbourne houses, for example, have been outperforming units over the last year. Meanwhile, in Sydney, the opposite is true; units are growing value more than houses¹. If you want to concentrate on capital gains, this is an important difference to note and demonstrates why it is so vital to do enough research before investing in a particular area.
 

Existing vs off-the-plan

The idea of building value yourself is not solely relegated to off-the-plan builds.

The next choice you will need to make upon deciding the kind of property you want to invest in is whether you want to build it from scratch or to buy an existing property. Pre-built properties have the advantage of being available immediately, but can have some pre-existing conditions in the structure itself, whether that is from shoddy building work or simple age. Buying off-the-plan means you have to wait for construction to finish, but by the time the build is complete you may have found that capital gains have worked their magic and made your property that much more valuable than when you started².

Of course, the idea of building value yourself is not solely relegated to off-the-plan builds. There is a reason the term 'fixer-upper' exists, after all. Buying a dilapidated home in a good or growing area at a bargain price could well be an excellent investment choice, particularly if most of the issues are purely aesthetic ones that you can fix yourself. However, before doing this, it is even more important than usual to get a property inspection to make sure the damage is only surface deep.

Anyone looking to invest in property needs to get a good investment loan - that's where the experts at IMB can help you out. To discover the range of financing options available to you, get in contact with one of our home loan experts today!

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Source:

¹ CoreLogic RP Data, Monthly House Value Indices

² realestate.com.au