Lifestyle changing property investment
2013/08/30

"Most people buying residential property these days are not only thinking about having a pleasant, convenient place to live, but also about building wealth and getting ahead in life."

Young people are staying in the rental property pool for 8 to 10 years longer than they used to. However, the most likely way to build real estate wealth is by holding property for long periods of time, preferably 10 years or more and that simply does not coincide with the lifestyles of many young people.

Gone are the days of the mid-20s marriage followed quickly by two or more children and a second or even third property purchased by the time people were in their late-30s.

Young people now tend to move around much more in their 20s than their parents did, often to better their careers before they settle down, and many also carry heavy student debts. Others just don't want the responsibility and expense of homeownership, including upkeep and additional payments such as levies, rates and taxes or insurance.

The latest statistics from the mortgage originators show that the average age of first-time buyers is now between 35 and 36, and the 'oldies' who are selling and downscaling to smaller properties are key drivers of market activity at the moment.

This is good news for the buy-to-let property investor.

With the backlog in home building over the past few years, and demand continuing to rise as more people enter the rental pool, there is already a shortage of rental units in many areas.

This of course means that both rentals and the capital value of rental properties are rising and that is no doubt why we have seen buy-to-let purchasing start to rise again, from 3.5 percent of all property sales in 2012, to around 8 percent this year.

However, it is becoming increasingly important for such investors to ensure that their assets are managed by agents who are properly qualified to do so.

Landlords who decide to self-manage and save a rental agent's monthly management fee often end up losing a great deal more than that because they were not able to vet a new tenant properly and get the correct credit information, or because they did not ask for a big enough deposit, or because they receive no rental income for several months while going through the legal process of evicting a defaulting tenant.

But the biggest hurdle for landlords managing their own properties is usually compliance with the increasing amount of complicated legislation regulating the relationship between landlords and tenants.

A good managing agent will ensure that you stay on the right side of the law.

Property Investor