Daily Telegraph – Montrose

Oct 29, 2012

Gen Y wade into property game

‘Buying an investment property used to be the pursuit of wealthy professionals or retirees but, today, the image of a ‘‘typical’’ investor no longer has an easily identifiable face. Investors in residential real estate range from mum-and-dad investors to, increasingly, Gen Y buyers who are getting their feet on the property ladder while continuing to live under Mum and Dad’s roof.

According to mortgage broking firm Loan Market, Gen Y has become more active in property investment with homebuyer confidence reportedly at its highest since the
start of the GFC. Loan Market’s Lee Banh says the company has experienced a 40 per cent jump in inquiries from potential Gen Y investors over the past two months compared with the same period last year. Banh says the fact that rental yields are at favourable levels in most capital cities means young investors can live at home with family and pay few or no bills at all, or live elsewhere in cheaper share accommodation while their mortgages are being serviced.

Christie Chun, a 23-year-old nurse, decided to invest in a studio apartment off the plan in North Sydney’s luxury Montrose development for $520,000 after saving a 10 per cent deposit but may live in it briefly and then rent it out. ‘‘It’s a nice feeling that I’m getting my foot in the door early,’’ she says. ‘‘I feel like buying an investment property now could save me money in the long run. I’ve got about a year-and-a-half until the building is complete and by then I feel confident that I’ll have saved the other 10 per cent I need so I don’t have to pay mortgage insurance.’’ Colliers International director of residential project marketing Curtis Field says Montrose has been popular with a wide cross-section of investors. Of the 104 apartments, 40 per cent have already been sold, the majority being studio and one-bedroom units which have gone to investors.

‘‘Montrose offers a solid investment, and is delivering a strong yield,’’ he says. ‘‘This is supported by the building’s central location, numerous public transport options and strong underlying tenant demand.’’ Scott Durrant, sales agent turned buyer’s agent with Successful Ways, says he is seeing an increase in young first-time buyers looking to invest in real estate, rather than buy a home as owner-occupiers. Durrant says some savvy young investors are building their wealth by choosing to invest now where they can afford, building equity and saving more with the grand plan of buying a ‘‘dream home’’ later.

Whether potential first-time investors are young or old, have equity or not, Durrant says there are a few questions they need to ask themselves. ‘‘Ask yourself, ‘Where’s my deposit coming from?’ ‘‘If you’re going to use equity from the place you live in, do you know how to get it out? How much do you have in savings?’’ he says. ‘‘Then the next step is getting a valuation.

Ask yourself,‘What’s your place worth and how much do you owe?’ ’’ He says the next question is obvious: ‘‘How much can I borrow?’’ While investors can use the equity in their existing property to buy again, Durrant says the uninitiated need to realise they can’t take it all, so speak with a broker.

The final, (hopefully) million-dollar question is the hardest to answer: ‘‘Where should I buy?’’ ‘‘I’m big on units in the inner-city ring, probably within 5km of the CBD,’’ Durrant says. ‘‘My clients want to buy established property — they don’t want to take risks.’’’

Article by Kirsten Craze