During the pandemic in 2020, the value of my property accelerated and, with lower interest rates, I had the opportunity to buy multiple properties. The properties have grown in value faster than my ability to save – and that is despite being able to save 80 to 90 per cent of my pay cheque by living with my parents during the lockdown and working from home.
What was the process like?
I’ve always been a risk-averse investor and always believed that I should only invest in locations that I am familiar with. In addition to the interest rate hikes diminishing my borrowing capacity, my personal preference for buying in my city (Sydney) also limited my options. I did research into dual occupancy properties, which can potentially give two streams of rental income, so I initially narrowed my search down to those types of properties.
I bought a property in 2023 when interest rates were still going up. But my previous properties, which I bought during the low-rate period between 2021 and 2023, were positively geared, and I was consistently saving 80 per cent of my income, so I managed to save close to $192,000 towards the next home.
What did you initially want?
The property I initially had an interest in was a great buy because of the huge land size (1050 square metres) and with dual occupancy (a main house with three bedrooms, two bathrooms and a double garage, tenanted at $750 per week and a separate living area with two bedrooms and one bathroom tenanted at $550 per week).
I promptly contacted my lender to confirm my borrowing capacity before contacting the agent and putting in my offer.
Unfortunately, the agent declined my offer as they wanted more than $300,000 over my budget.
What did you end up buying (and how)?
I ended up buying a four-bedroom, three-bathroom, freestanding house with a two-car garage in Western Sydney for $1 million.
My rationale for buying the property was due to the vendor agreeing to sell the property for the lower price guide and it being comparatively good value for money compared to other properties listed in the area at the time.
The rental income of $1000 per week was also relatively high for the area and also increased my borrowing capacity. The vendor and real estate agent also took a liking to me as I made an offer on the first inspection and provided transparency on my purpose of purchase with the intention to keep existing tenancies, as well as acting promptly and efficiently.
Give us a snapshot of the market
As a young investor in the current market, the strategies taught by my parents are not feasible and cannot be achieved due to the tightening of lending as well as the gradual increase in property prices.
The growth in the Sydney market across all areas makes it difficult for my generation to enter the market, as the areas we once considered affordable have slowly begun to become out of reach for first home buyers and investors alike. This is caused by a flow-on effect of being priced out of a desired suburb and buyers then looking at once-cheaper surrounding areas.
