Generating wealth by buying an investment property in Australia and renting it out for a long period of time is a very popular investment strategy. Buying bricks and mortar is part of the Australian investment psyche. We feel comfortable buying fixed assets we can touch and walk around in.
On average, Australian property owners will hold an investment property for 8 to 10 years. A rough rule of thumb that Australian stick to in metropolitan areas is that property values double every 10 years and that is a good time to maximize profits on your investment house or apartment.
With interest rates falling to historical low levels in the past few years, property investors have found they can profit from investment properties in shorter cycles than in previous decades. Yet it is important to remember that like all asset classes, property is cyclical and does have highs and lows. It is important to evaluate your personal financial goals to ensure you understand that to reap investment property profits, you will need to understand the current cycle of capital gain growth in property.
Many property investors increase the value of their investment home by renovating two key rooms; the kitchen and bathroom. These two rooms often involve multiple tradespeople and can be expensive and inconvenient for property owners to renovate. Buyers will often pay premium prices for properties that have new kitchens and bathrooms.
The key point is that the Australian market is relatively stable, so if you invest well, set yourself a reasonable time period to watch your investment grow and exercise patience through the turbulent times, you can ride out the rough patches and reap rewards. More often than not, investors come out with a nice profit at the other end, to then spend as they wish or, better yet, invest in their next property goal!
There are no hard and fast rules, the important thing is that you understand your individual circumstances, pay close attention to the market your property is in and keep in touch with your real estate agent for any inside word they can offer you on changes in the market.
They may have a random buyer who has specific needs that they’re willing to pay for, and your property ticks all their boxes. Property investment is a slow race but a rewarding one, if you can maintain a steadfast commitment to your investment and remain cautiously optimistic throughout market cycles and as different opportunities present themselves.