Buying an investment property in regional Victoria is becoming an increasingly attractive proposition, with Bendigo identified by some property experts as a market ready to boom.
According to Luke Goggin, managing director of Luke Goggin Real Estate, one investment group is spending up to $40 million to purchase Bendigo properties in bulk, while a large number of Sydney and Melbourne buyers are also looking for investment properties and land.
“This has been going on for about six weeks and we have seen huge sales over the usual quiet period of winter,” Luke says, adding that the Bendigo market is now at 40 per cent of the Melbourne median price, which hasn't happened since 2002. “Every time this has occurred, prices start to rise quickly and we have always gone into a sellers market,” he says. “So your decision to get into the market now is perfect, as you’re getting in at the low end of the market and will be able to collect the expected capital increases.
“We sit with the lowest interest rates on record, the First Home Owner Grant is now in place, availability of rental properties is drying up and rental prices are on the increase, 500 new jobs are still being implemented at the Bendigo Hospital and a mining company claims to have discovered a billion dollars’ worth of gold reserves in the Bendigo area, which is causing an expectation for another mining boom in Bendigo.”
So where do you start? According to Michael Beresford, director of investment services at property investment firm OpenCorp, the first step isn’t related to either the investment or even the property itself, but interviewing your mortgage broker. “That’s a common mistake that people make,” he says. “You want to make sure the properties you buy as investment shouldn’t be properties you would like to live in – they’re purely vehicles to be able to get you the financial outcome that you want. So really being clear on what the end looks like and what good looks like in terms of how much you want is the key first step and then shortly thereafter, understanding what’s actually possible from a borrowing perspective.”
Ian Hosking Richards, CEO of Rocket Property Group, says many first time investors may have concerns, such as interest rates rising or a future tenant trashing the place. But those are usually minor issues for experienced investors who know how to mitigate the risks. “The worst case scenario rarely eventuates,” he says. “If you do nothing you will probably work like a dog for 40-plus years and end up with little, so I think that Australians should be driven more by the fear of ending up without enough money, rather than the fear of making a mistake.”