{"id":16868,"date":"2023-06-21T08:12:58","date_gmt":"2023-06-20T22:12:58","guid":{"rendered":"https:\/\/www.prosolution.com.au\/?p=16868"},"modified":"2023-06-27T14:57:51","modified_gmt":"2023-06-27T04:57:51","slug":"limited-borrowing-capacity","status":"publish","type":"post","link":"https:\/\/wealthcoach.com.au\/stage\/limited-borrowing-capacity\/","title":{"rendered":"Borrowing capacity isn\u2019t enough for an investment-grade property? \u00a0"},"content":{"rendered":"\n
\"Limited<\/figure>\n\n\n\n

If you are considering borrowing to invest in a quality property, I would like to remind you of three important considerations.<\/p>\n\n\n\n

Firstly, it is my thesis that property investors must be more selective about which property\/s to invest in. In that past, investors have benefited from a rising tide (driven substantially by rising borrowing capacities), which benefited all properties. However, borrowing capacity is likely to be stagnant over the coming decades. Therefore, a property\u2019s fundamentals are likely to be more important which means you must invest in better quality<\/em> properties. I have discussed this here<\/a> and here<\/a>.<\/p>\n\n\n\n

Secondly, the reason that borrowing to invest in property is such an effective wealth accumulation tactic isn\u2019t due to property per se. It\u2019s due to the high level of gearing (borrowing), which I discussed here<\/a>. The decision to borrow is the key here \u2013 not the decision to invest in property.<\/p>\n\n\n\n

And finally, I have discussed<\/a> that borrowing capacity has reduced by 30% to 40% over the past year (because interest rates have been hiked 4% over the past 11 months), which means fewer people will be able to afford to invest in investment-grade property.<\/p>\n\n\n\n