Finding an investment property harder than saving for one: Mortgage Choice

The ‘perfect’ investment property is a much-discussed myth. The holy grail property may be high-yielding, high capital growth with little to low maintenance or costs attached and where a perfect long-time tenant is just around the corner.

However, even when not looking for a property that suits these lofty goals, it’s a tough gig. In fact, according to Mortgage Choice’s 2014 First Time Investor Survey, it’s even harder to find the right property than it is to save tens of thousands of dollars for a deposit.

Their survey, which Mortgage Choice commissioned market research company Nine Rewards to conduct, saw 1,047 Australians looking to buy their first investment property in the next two years, or who have recently purchased their first, answering. It was conducted this month.

{plotalot id="14"}

Source: Mortgage Choice

Of those surveyed, 50.6% cited that finding the property was the hardest part. Meanwhile, 15.3% pointed to saving for the deposit, even as 15.5% pointed to choosing the right strategy.

Spokesperson for Mortgage Choice, Jessica Darnbrough, said that this was surprising.

“With property values climbing considerably over the last 12 months, we expected to see more first time investors saying their biggest challenge was saving a deposit,” Darnbrough said.

Of those who have bought in, the majority (more than 60%) looked to buy a small house of one to three bedrooms, or a small unit with one or two bedrooms.

Just 23% of investors bought a large house of four or more bedrooms, or a large unit with three or more bedrooms.

The smaller type of stock is in higher demand, notes Darnbrough. She said that new investors are looking for a property in the right suburb, close to amenities, and with high tenant demand.

“For investors, it seems location is everything. A property that is located in a good suburb and near the necessary amenities including cafes, restaurants and local transport, is likely to attract more tenants, which can help to increase the rental income generated by the property,” she said.

Turn over page for tips on finding investment properties.

FIRST TIME INVESTMENT HELP: WHERE TO TURN WHEN YOU DON'T KNOW WHERE TO BUY

For first time investors looking to purchase property, there are many online resources that you can use for free, as well as tips and tricks to ensure you find the best investment possible.

Having surveyed Property Observer readers in the past, it was unsurprising that indecision is obvious when choosing an indicator of growth for an area.

{plotalot id="15"}

Source: Property Observer September 2013 survey

While everyone will come up with their own indicator of growth and what it means for their investment strategy, we endeavour to provide you with the data and tips that will assist.

Here are some starting points that will come in handy for every first time investor:

• Our free suburb data pages are available, along with this guide here.
  
  
• We also regularly run “How To” articles. A good first step would be this piece about how to assess a street within the suburb you’re considering.
  
  
• If you’re not quite at this stage yet, then we recommend these five steps for choosing the right suburb.
  
  
• You may also be interested in our suburb spotlights, where we delve into individual areas. Here are the current suburbs we have looked at. You can request an area by emailing news@propertyobserver.com.au

Are you interested in reading something else? Email jduke@propertyobserver.com.au