A short advisory YouTube monologue (Aaron Whybrow, Nov 27, 2018) arguing that while Sydney property prices may feel high, investors should consider the broader Australian market, focus on numbers and returns, and plan long-term. The speaker highlights lending differences for investment loans (higher rates for interest-only), the importance of cash flow strategies (negative/positive gearing), and the value of mortgage brokers who access many lenders and originate a large share of loans in Australia.
I get it. Prices of property are high to invest in certain areas, especially in Sydney. If we live in Sydney and we want a property in Sydney. Let me challenge you for a second. If you want to invest, think about the broader area of Australia as well. When you're investing in property, it is a business transaction that you're going to enter into. One is that you are going to look at the numbers very, very carefully. Number two is you want the money off it, you're an investor, you want a return. And number three is, does it really matter where the property is? And I think the answer is yes and no. So we need to have a look at the numbers first, how much it's going to cost you and how much it's going to give you back in return. A couple of things to note with some of the things lending requirements have changed, especially with investment properties. These can be from a higher interest rate than an unoccupied mortgage. If you go interest only, they're going to go slightly higher on the interest rate. Again, there's some ways to deal with that and there's some reasons why you would go principal and interest and interest only, depending on the life cycle of where you're at at the moment. We need to assess whether you can buy one property, two properties, three properties, what the price might be, and we need to have a look at the return on that as well. So are properties prices high? I suppose they're not totally as high as in retrospect of a few years ago to today. It's just might be needing to think about the area you're going to invest in a little bit further. So the best way to prepare for a property investment is to not get emotionally involved in things right now is to understand your current circumstances, your budgetary requirements and how we can use the next step that you can go into purchasing property to buy income to get that income to pay off your own occupied debt, or get that income to go back into the property to be able to own the asset down the road. Imagine if you could go into retirement with your home paid off, an investment property paid off, maybe other properties paid off that are providing you income week after week after week after week without you needing to go to work. Superannuation may not cut it when we go to retirement. So think about these things. Property investing is for the long term. There are big fancy words out there like negative gearing, positive cash, positive gearing. There's the fear that is coming around with royal commissions and a whole range of other things, but there are ways to do it right. And a mortgage broker can help you on your side. We work for you and we go through your situation and help you go through the right process. And statistically, in Australia at the moment, well and truly, over 50% of all the loans are originated by brokers, because we actually have access to all the lenders. You typically up to 30 lenders. So are property prices too high? Maybe, maybe not. It really depends on what your strategy is going to be. All right, have a great day.
