First in, best dressed: Why you should invest in property from a young age

finder.com.au speaks to managing director of Metropole, Michael Yardney, about why you should build wealth from a young age.

young investorWhen it comes to investing in property for the first time, you may feel like you’re in over your head. Lacking in disposable income and investment know-how, your chances of surviving the property market as you compete with cashed-up investors may seem slim.

Rest assured, investing from a young age provides you with the power of compounding, where time is your trump card.

While investing early on demands a different approach and mindset compared to investing when you’re older, you can reap significant financial benefit – and for longer – if you invest cautiously.

Why invest from a young age?

1. Compounding over time

MichaelYardneyMetropoleThe greatest advantage that young property investors have is time. Not only do young people have more years to learn about property investing strategies and markets, but they also have more time to recover if they make a poor investment decision. For instance, if you purchase a rental property when you’re 20 and you end up making a loss from the purchase, you have time to learn from your mistakes and recover- it’s a learning curve.

CEO of Metropole Property Strategists, Michael Yardney, says that if you're nearing retirement and you make a poor investment choice it can be more difficult to recover.

“We believe people should get onto the property ladder sooner rather than later because of the power of compounding,” he says. “In other words, if you want to invest in property now, over time it will double in value.”

2. Financial benefit

Property investingSome of the main financial benefits of investing in property from a young age include:

  • Maximise cash flow: One of the objectives of property investing is to increase cash flow, or the money left over each month after expenses have been accounted for. Generally, cash flow will increase over time as rent increases, while your repayments will largely remain the same, and the mortgage will be paid off as you gain equity in the property.
  • Appreciation: The longer you own an investment, the more it will appreciate in value. While the opposite is also true – the property could potentially decrease in value – it’s likely that it will increase in value again if you own the property for long enough. The median house price increased by 14.1% in 2014 in Sydney alone.
  • Diversify your portfolio: Over time, you can buy several investment properties to build your wealth. The sooner you buy your first income-producing asset, the sooner you can diversify your portfolio and buy other investment properties.
  • Negative gearing and depreciation: As Yardney suggests, young people can benefit significantly from negative gearing and depreciation associated with real estate over time: “Many young people are using investment properties as a stepping stone, as it may be cheaper to own a rental property than a home. The repayments are subsidised by the rent and you end up getting various tax benefits such as depreciation and negative gearing.”

3. Control

Unlike other forms of investing, such as share trading, property investing provides you with a high degree of control. For example, if you get your property revalued and find that it has increased in value considerably, you could potentially charge higher rent.

Yardney explains: “As you get on in life, your personal circumstances change. You may get married and have two incomes, but then you may have kids and drop to one income. If such a situation arises, property investing allows you to let the magic of compounding work in the background.”


What are the risks?

property investment risk

  • Unexpected expenses: You need to be prepared for unexpected expenses by ensuring that you have enough funds to cover contingencies. For example, if your tenant suddenly vacates the property, it may take a while to find another tenant, which means you’ll forego rent for a period of time. As a young investor, you may not have experience managing cash-flow which is why it's important to carefully plan for unexpected costs that may arise.
  • Property value: While an investment that’s situated in a good area with infrastructure and nearby facilities is likely to appreciate over time, there is a chance that the property could decrease in value. This market risk may harm your capital growth over time, however this risk can be lessened through diversification, or by investing in different property types across different states.
  • Time-consuming: Managing a rental property takes time. You need to research the market and find a good property, advertise and find tenants, create a rental agreement or lease, design a budget for expenses and so on.
  • Liquidity risk: A savvy investor knows that they should have an ‘exit strategy’ in the event that they suddenly need to sell the investment. This risk is associated with the idea that you may be unable to sell a property should the need arise. To manage this risk, you should invest in an area with strong demand and positive buyer sentiment.
  • Economic risk: Although the Reserve Bank has eased monetary policy in recent times, and with a historically low cash rate of 2%, interest rates are predicted to rise early next year. This interest rate risk means that the cost can increase for a variable home loan.
  • Buying the wrong property: Unless you engage in thorough research, you risk purchasing a property that will not meet your investment objectives.

In order to minimise these risks, Yardney says that you should educate yourself and surround yourself with a good team.

Young property investors should also treat their portfolio like a business: “They should treat it like an enterprise where each property is their employee and it should be checked once a year to make sure their employee is behaving.


Investing in property for the first time can be exhilarating, and there is no better time than when you're young. Just make sure you determine a long-term investment strategy, consult the right professionals and conduct thorough market research so you can make the most of your wealth creation.

Compare the latest investor mortgage rates

Rates last updated December 10th, 2018
$
Loan purpose
Offset account
Loan type
Repayment type
Your filter criteria do not match any product
Name Product Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Short Description
3.99%
3.99%
$0
$0 p.a.
80%
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.
3.89%
4.24%
$0
$0 p.a.
80%
Fix your rate and minimise repayments for 2 years with this interest-only investor mortgage.
3.99%
4.13%
$0
$10 monthly ($120 p.a.)
80%
A competitive variable rate home loan with no application fee.
3.84%
3.91%
$0
$0 p.a.
80%
Get instant online approval and flexible repayment options with this fixed rate mortgage for investing.
3.98%
5.01%
$0
$395 p.a.
90%
Fix the rate on your investment property for 2 years with this competitive home loan package.
3.79%
3.82%
$0
$0 p.a.
80%
An essentials variable investor mortgage with a high borrowing amount so you can fund a large purchase.
3.94%
3.94%
$0
$0 p.a.
70%
Investors with a 30% deposit can get this low rate loan to fund their property portfolio. Take advantage of split and redraw facilities.
3.74%
3.79%
$499
$0 p.a.
80%
Competitive variable investor mortgage to fund your property portfolio. You can add a 100% offset account for just $10 a month.
4.03%
3.92%
$499
$0 p.a.
80%
A competitive 3 year investor rate with principal and interest repayments. Optional offset account with a $10 monthly fee.
4.05%
4.22%
$0
$10 monthly ($120 p.a.)
90%
Lock in your interest rate on your investment property for 2 years. Earn Velocity Frequent Flyer Points.
3.91%
3.92%
$0
$0 p.a.
80%
Investors can go from application to approval in as little as 20 minutes with this innovative online lender.
3.98%
3.98%
$0
$0 p.a.
70%
Investors can get a 100% offset account and a low rate if they have a big deposit. 100% online application process.
4.09%
4.87%
$0
$395 p.a.
90%
Buy your investment property and set your repayments for the first year. Available in QLD, NSW and ACT only.
3.99%
3.94%
$0
$0 p.a.
80%
Buy an investment property and enjoy the certainty of a 3-year fixed rate with interest-only payments.
4.09%
4.40%
$0
$0 p.a.
70%
Forget about rate rises for two years and minimise your investment repayments with this interest only mortgage. Requires a 30% deposit.
4.54%
4.59%
$600
$0 p.a.
80%
An investment loan for new Heritage Bank customers. Low fees and interest-only repayments.
3.97%
3.99%
$0
$0 p.a.
80%
Package your owner occupied loan with investment loan and receive a discounted investment rate. 100% offset account included.
4.29%
5.33%
$0
$395 p.a.
90%
Lock in a competitive investment rate and combine your loan with a credit card and transaction account for extra savings. Package fee applies.
3.99%
4.62%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
4.29%
4.31%
$0
$0 p.a.
80%
Investors will pay no application or ongoing fees for this interest-only loan.
4.18%
4.18%
$0
$0 p.a.
80%
Investors get a 100% offset account and pay no application or ongoing fees on this loan from an innovative online lender.
3.89%
3.91%
$0
$0 p.a.
80%
Investors can go from application to full approval in as little as 20 minutes with this innovative online lender.
4.29%
4.31%
$0
$0 p.a.
80%
A simple, variable rate investor loan from an online lender that keeps fees to a minimum.
3.99%
4.62%
$395
$0 p.a.
80%
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.
4.90%
4.31%
$0
$0 p.a.
80%
Lock in a fixed rate for 5 years and make interest-only payments with this investment loan.
4.24%
4.68%
$0
$0 p.a.
90%
Fix your investment repayments for 1 year. You can get this loan with a 10% deposit. Available in QLD, NSW and ACT only.
4.64%
5.39%
$0
$395 p.a.
90%
Pay off your investment knowing your exact repayments for the first 4 years. Get this loan with a 10% deposit.
3.99%
3.92%
$0
$0 p.a.
80%
A variable interest-only loan for investors. Fast application, low fees, optional offset account. 100% online lender.
4.29%
4.27%
$0
$198 p.a.
70%
Fund your property portfolio with this fixed rate mortgage which includes a 100% offset account. 30% deposit required.
3.89%
3.91%
$0
$0 p.a.
80%
Lock in your interest rate for 2 years and enjoy flexibility, an optional offset account and a fast online application process.

Compare up to 4 providers

Aussie Home Loans Logo

Enter your details below to receive an obligation-free quote from an Aussie home loans expert today

By submitting this form, you agree to the Finder Privacy and Cookies Policy and Terms of Use

Applications are subject to approval. Conditions, fees and charges apply. Please note that you need to be an Australian citizen or permanent resident to apply.

Credit services for Aussie Select, Aussie IQ and Aussie Optimizer products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 ("Aussie"), and its appointed credit representatives. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133 Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Optimizer products is provided by Perpetual Limited ABN 86 000 431 827 (Lender). Credit for Aussie IQ is provided by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502. Home loans issued by the Lender are serviced by Macquarie Securitisation Limited ABN 16 003 297 336, Australian Credit Licence 237863 (MSL).

Aussie is a trade mark of AHL Investments Pty Ltd. Aussie is a subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124. ©2018 AHL Investments Pty Ltd ABN 27 105 265 861 Australian Credit Licence 246786.

By submitting this form, you agree to the finder.com.au Privacy and Cookies Policy, Terms of Use, Disclaimer & Privacy Policy and the Aussie privacy policy.

Aussie Home Loans is both a lender and a mortgage broker, and offers a range of services.

  • FREE Suburb and Property Report with every appointment.
  • Access 3,000+ loans from over 20 lenders.
  • Get expert help with your loan application, including paperwork and eligibility.
  • Over 1000 brokers who are able to help you in your local area.

Aussie Home Loans Lender Logos

The Adviser’s number 1 placed mortgage broker 5 years running (2013-2017)

Images: ShutterStock

Back to top

Belinda Punshon

Belinda is a journalist here at finder.com.au. Specialising in the home loans and property sections, she is passionate about helping Australians improve their financial wellbeing.

Was this content helpful to you? No  Yes

Related Posts

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Ask a question
Go to site