Why Some People are Scared When Investing in a Property
Buying and investing in property requires a significant emotional and financial commitment. It’s natural for some people to feel hesitant or uncertain about taking the plunge. But don’t worry, understanding potential risks and concerns is one of the best ways to ensure a successful investment journey.
Here, we explore some of the key reasons why many potential investors hold back from entering the property market - and why these fears may not be as daunting as they seem.
Common Barriers to Property Investment
Loved Ones with Good Intentions
Rationally, investing in property makes sense, but emotionally, fears and doubts can take over.
One of the biggest obstacles for potential investors is the influence of well-meaning loved ones.
Concerns about market volatility, like those seen during the COVID-19 pandemic, often lead family and friends to offer cautious advice.
Even if you have real estate knowledge, external opinions from concerned loved ones can plant seeds of doubt, preventing logical investment decisions.
Lack of Understanding of the Market
Many people assume they need in-depth market knowledge to make a smart investment.
In reality, buyer’s agents and property investment companies already have this knowledge and can share valuable insights.
With extensive online resources, property research can now be done from home, making it easier than ever to educate yourself on market trends.
A lack of market knowledge shouldn’t be a reason to miss out on wealth-building opportunities.
Feeling Overwhelmed by the Idea of Becoming a Landlord
Becoming a landlord is a big responsibility, and many investors worry about the time and effort required.
Managing a property alongside a full-time job can seem overwhelming, especially for first-time investors.
The good news? Property managers can handle everything on your behalf, from tenant screening to maintenance.
While property management services come with a monthly fee, the peace of mind and convenience make it a worthwhile investment.
Worried About Property Prices Dropping
Property prices can fluctuate in the short term, but real estate is a long-term game.
Over the past 25 years, house prices in Australia have grown at an average annual rate of 6.8%.
In 1994, the median house price was $111,524: fast forward to today, and that same house is worth $460,000, a 412% increase.
Buying during a downturn can actually result in even higher profits over time.
Preference for Seeing Money Grow in a Savings Account
Many people find comfort in watching their savings grow in a bank account, leading them to hesitate when it comes to property investment.
However, savings accounts in Australia currently offer low returns, with interest rates at all-time lows.
In 2020, the maximum savings rate was just 1.55%, compared to 6.8% annual property returns.
Given these figures, investing in real estate can offer far greater long-term returns than traditional savings accounts.
Final Thoughts: Investing in Property Doesn’t Have to Be Intimidating
There’s plenty of support available for first-time property investors. If you’re concerned about low savings account returns or looking to diversify your investments, property can be a secure and profitable choice compared to ETFs, bonds, and superannuation accounts in Australia.
If you’re considering entering the property market, but feel unsure about where to start, our team at Providence is here to guide you through the process. Get in touch today to explore your investment options with confidence!
