What to do if residential property is out of your budget?

For many overwhelmed property investors, residential prices across the country have become notoriously high. Even those who’ve been in the game for years, with deeper pockets than most, are having to push to the edges of their budget to afford a high-quality property investment.

COVID-19 has locked our borders, keeping thousands more Australians at home than normal, probably the most since air travel became affordable back in the seventies and eighties. Those Aussies aren’t spending on plane tickets and fancy Parisian hotels; they’re splurging on vehicles (car sales have increased 68 per cent year-on-year), campervans, home entertainment systems, and they’re buying new properties.

The result of more buyers in a short-supplied residential market? Many would describe it as “insane” property prices.

And even if monthly dwelling value growth is slowing, as shown in almost every city, the property cycle is not. Those who are deciding to hold off their search for a residential property investment until the hot market (hopefully) cools in a couple of years will find themselves paying for the same asset with an additional 10 per cent to 20 per cent on the price tag. Not to mention interest rates won’t remain at the record-lows seen over the last 18 months.

That’s because there are still plenty of residential investment opportunities out there. And experienced investors are far from throwing in the towel. The pros know there is still value remaining in the property market, and they’re willing to spend more to acquire a position in it.

So, what are the alternatives if you can’t afford a house? Just not invest at all? Maybe look at the stock market to help build your wealth or your prosperous retirement? Apparently Bitcoin just hit a record high… Could that be an option? Sure, they are options. But the rollercoaster of volatility will probably have you wishing you’d stuck it out in the property game a little longer.

Or you could consider investing alongside a residential property trust.

Residential property trusts in Australia

Residential property trusts

have exploded in popularity in recent years.

The Australian Financial Review estimates that real estate mutual funds in Australia received almost $700 million in investment capital in the first quarter of 2021, more than triple the amount year-on-year.

It makes sense, because not only are property prices hitting decade-highs, competitiveness in the market is too.

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Right off the bat, yes, we offer residential property trusts. But don’t take this blog post as some salesy, overly-biased pitch. Hear me out.

Our focus has traditionally been commercial real estate investment. We pool our money with other investors in unlisted property funds to purchase high-ticketed commercial assets worth tens of millions of dollars. The strategy works. We’ve provided our investors with an average annualised return of 19 per cent p.a. and approx. 88 per cent of them have reinvested with us. So we know the value of investing as a team, partnering with other investors of a sophisticated nature, to purchase big league property which is usually out of reach if they were to invest alone.

And we know the value that remains in the current residential property environment. That’s why we think residential property trusts are a very good consideration for those who’ve been outdone by the pressure cooker property market.

Benefits of investing in a residential property trust

A residential property trust combines the expertise of property professionals and the accessibility of a modest-sized investment.

Here are some of the benefits you’ll see investing with a residential property trust:

• Access to large residential assets, otherwise out of reach on your own
• Strong residential yields of between 3 per cent and 5 five per cent (and higher when investing with the right fund)
• Huge opportunity for capital gains
• Peace of mind with professional property investors at the helm of every investment
• A set and forget investment
• A proven track record of results

We invest alongside each investor in every property fund. This creates trust and transparency, because when we win, our investors do too. We’re in it with you, from start to finish, bumps and all.

How to invest in a residential property fund

There are typically minimum investment amounts involved when investing with a fund. For example, you may expect to invest a minimum of $200,000. This is the rough deposit required for a $600,000 property purchase, taking stamp duty and settlement costs into account.

You may also need to be a sophisticated investor, either investing $500,000 in a single trust, holding assets of over $2.5 million, or having had an income of at least $250,000 per annum over the last two years.

Learn more about sophisticated and wholesale investors here.

All you need to do is ensure you find the right property trust to invest with.

If you’d like more information on investing alongside Properties & Pathways, an experienced property investor with skin in the game and hundreds of prosperous investors, don’t wait until the property market “cools”. Get in touch today.