New research has found that saving for a deposit is not the biggest challenge for people purchasing their first investment property.
Instead, finding a suitable property is the hardest trial facing property investors today, according to a first time investor survey by Mortgage Choice.
Just over 50% of investors who purchased their first investment property within the last two years said finding the right property was the trickiest part.
Mortgage Choice spokesperson Jessica Darnbrough said the results were surprising, especially given the current market conditions.
“With property values climbing considerably over the last 12 months, we expected to see more first time investors saying their biggest challenge was saving a deposit.”
Instead, just 15.3% said saving a deposit was the biggest challenge they faced when investing in property, while a further 15.5% said choosing the right investment strategy for their needs was the toughest aspect of property investment.
It seems clear from the data that Australians are “quite particular” about what they want from their investment property, Darnbrough said. “They know what they want and they won’t settle for anything less.”
When purchasing an investment property, investors look for a dwelling that is not only located in the right suburb and is close to essential amenities, but also a property that is located in an area that has proven high tenant demand, she said.
“For investors, it seems location is everything. A property that is located in a good suburb and near the necessary amenities including cafes, restaurants and local transport, is likely to attract more tenants, which can help to increase the rental income generated by the property.”
More than 60% of recent investors purchased a small house (one to three bedrooms) or a small unit (one or two bedrooms) because they know these types of properties are in the highest demand, Darnbrough said.
“Despite the fact that the property market is running hot at the moment and there is a lot of competition out there from other buyers, it seems first time investors are happy to bide their time and wait until they find the perfect property.”
Market research company Nine Rewards was commissioned by Mortgage Choice to conduct the study, which in May surveyed 1,047 Australians who were planning to purchase their first investment property in the next two years or had recently purchased their first investment property.