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Rising rents, lowered investor interest

I have been reading that this is a good time to invest in a rented out apartment as rents are rising strongly but I have also read that investor interest is waning. This doesn’t seem to make sense – am I missing something?

Some property investors have had an ordinary experience lately especially if they have properties in coastal and holiday areas but I think landlords in capital cities in the right areas where tenants want to live have enjoyed rising rents and a tight market where demand outstrips supply.

This is likely to keep happening and therefore I think it’s still a good time to think about being a landlord. The rising interest rate scenario could be scaring some investors but I always recommend that property investors take fixed interest and interest only home loans. You do have to make sure you don’t lock in for too long at the top of the interest rate cycle and so now I wouldn’t lock in for any longer than three years. Of course, if the deal works at current rates, which you can lock in, well that’s okay even if interest rates fall. Sure you miss out on extra profit but you still are doing okay.

Right now I think high interest rates might be spooking some investors but if you buy where rents are solid and where tenants want to live, I think it’s still a good time to invest in property.

Prices could fall in the short-term, though I don’t expect it — but you should be a long-term investor, for at least 10 years, and this will give you plenty of time to pocket great capital gains.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Tuesday, May 03, 2011

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