A stable economy and rising property prices make Australia one of the better countries to invest in, but what if you have never invested here before?
How exactly does an international property investor get started in the land down under?
If you have been asking yourself that question recently, perhaps this article which we have prepared with the help of local investment experts is just what you’ve been looking for.
Research, research and research
Property Entrepreneurs Network founder, Kathryn Sands emphasises that research is the first step an investor should take on their property investment journey.
Considering the costs involved and the length of time needed to get a return on your investment, she suggests that you spend your time finding as much information as you possibly can in order to make a good purchase decision.
This research can take on many forms, be it through newspapers, magazines, websites or by meeting with experts and fellow investors. Whatever you do, Sands stresses that you cannot do enough of this.
Learn the local rules and regulations
“Property Professor”, Peter Kouzilos explains that there are a lot of restrictions for foreigners who want to buy property in Australia which professional investors should take heed of. For example, did you know that any residential property you wish to buy must have been built recently?
You may also need to get FIRB approval from the government to complete your purchase. The FIRB or Foreign Investment Review Board reviews purchase applications from all foreigners to only allow purchases that will affect the local economy positively.
You also have the option to apply for a FIRB pre-approval even if you have not found a property yet which can speed up the loan process. This may help you during negotiations with the seller since they will know that you are serious about the purchase.
Learn about the additional costs of purchasing property
Before making a budget for your property purchase, don’t forget to factor in the costs for buying a property in Australia. These may include stamp duty, GST fees, legal fees and property inspection fees.
Since you may not be familiar with these fees, it might be a good idea to find a conveyancer or solicitor who can tell you exactly what fees will apply to your property purchase. This will help you get a better idea of how much money you will need for your investment.
Research the Australian property market
There are many factors which affect property prices in Australia. Tony Hayek, CEO of Blue Wealthy Property, reveals that these involve local economics, population, infrastructure spending and the basic laws of supply and demand.
As an international investor it may be harder to get this information, but a well-planned property investment strategy should take all of these into account. This may delay your purchase decision, however you will be able to make a better choice than if you had not considered these market drivers.
Buy a property in a good location
Kouzilos offers that some of the best properties are those located near the city or those with a good view of the sea. Another thing to look out for is the proximity to the CBD (Central Business District). These are the type of properties that people will like to live in.
Therefore, the better the location, the more demand there will be from potential buyers or tenants and you have a better chance on getting high returns from your investment.
Maximise the land component in your purchase
Many investors do not think about the long term effects of depreciation. They buy a house and they think that it will appreciate in value. However, the truth is that you are paying for the land and the building, out of which the land is the appreciating asset.
Therefore, make sure that you are spending more for the land than the building so that if and when you decide to sell, you will stand to make a profit.
Use online resources to find your ideal property
Mortgage broker Tina Pham buys and sells properties in her free time. The seasoned property investor highly recommends that foreign investors look up websites like realestate.com.au or propertyinvestor.com.au for potential properties.
Since going to an open house or auction may not be physically possible for you, these online resources can be the key to find the property that you think is the best for your investment strategy.
Pham also suggests that investors look up other websites to learn more about the buying process, compare prices in the market and read about other investor’s experiences, all of which can help you with your own property investment strategy.
Get a loan with the help of a mortgage broker
Why spend all your savings on your property when you can take a investment loan and use your rental income to pay off the mortgage every month? Or maybe you don’t have enough money to buy the property?
So how do you find a bank that will let you, an international investor nowhere near the Australian shores, borrow $500,000 for a loan?
Pham remarks that “a good mortgage broker is key to successful investing” because they will find the right lender for you. They should know all the lenders, be it a bank or non-bank lender whom you may never even had heard of, and they will know which loan product suits your situation.
A good mortgage broker can also speed up the loan process by telling you how to meet the lender’s criteria. They will know what properties are difficult to finance or which locations you should avoid.
Some mortgage brokers like Pham are property investors too, so they might be able to give you investment advice as well.
Know the popular states to invest in
With most foreign students studying in Sydney and Melbourne, Kouzilos mentions that both states are a popular choice for parents seeking to buy a property for their children to live in.
Other investors also prefer to buy in the two states because of the large population which means there is a larger market for them to rent or sell to.
How can I successfully invest in Australia?
Property investment definitely has it’s risks, even more so when you are investing in a foreign country. Local investors have many resources to make an informed decision, but with these tips international investors also have a better chance in making good investments.
If you have any other ideas or experiences that you would like to share with fellow foreign investors, please do let us know.
You can contact us by calling 1300 889 743 or by enquiring on our website.