When it comes to investing in property for the first time, you may feel
like you’re in over your head.
Lacking disposable income and investment know-how, your chances of
surviving the property market as you compete with cashed-up investors may seem
However, here are some reasons I would suggest you consider
investing from a young age:
What are the
- Unexpected expenses: You need
to be prepared for unexpected expenses by ensuring that you have enough
funds to cover contingencies.
For example, if your tenant suddenly vacates the property, it may take a
while to find another tenant, which means you’ll forego rent for a period
As a young investor, you may not have experience managing cash flow which
is why it’s important to carefully plan for unexpected costs that may
- Property value: While
an investment that’s situated in a good area with infrastructure and
nearby facilities is likely to appreciate over time, there is a chance
that the property could decrease in value.
This market risk may harm your capital growth over time, however, this
risk can be lessened through diversification, or by investing in different
property types across different states.
- Time-consuming: Managing
a rental property takes time.
You need to research the market and find a good property, advertise and
find tenants, create a rental agreement or lease, design a budget for
expenses, and so on.
- Liquidity risk: A
savvy investor knows that they should have an ‘exit strategy’ in the event
that they suddenly need to sell the investment.
This risk is associated with the idea that you may be unable to sell a
property should the need arise.
To manage this risk, you should invest in an area with strong demand and
positive buyer sentiment.
- Economic risk: Although
the Reserve Bank has eased monetary policy in recent times, and with a
historically low cash rate of 2%, interest rates are predicted to rise
early next year.
This interest rate risk means that the cost can increase for a variable
- Buying the wrong property: Unless
you engage in thorough research, you risk purchasing a property that will
not meet your investment objectives.
In order to minimise these risks, you should educate yourself and
surround yourself with a good team.
Investing in property for the first time can be exhilarating, and there
is no better time than when you’re young.
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Friday, 12 November 2021