Who should NOT invest in property... and the REASONS why.

Australian property spruikers ALWAYS talk about the people who should buy an investment property. I'm going to run through the property investors who should NOT buy a rental property. It's hard to work out who to trust for property investment advice in Australia, so I'll do the maths and explain the reasons, so you understand my assumptions.

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The first consideration is the length of your investment horizon. This suits two types of prospective property investor, the first is younger people who chop and change their investment strategy. The second is older people who don't have a reasonable amount of time to allow for compound growth. The transactions costs of buying a rental property in Australia is quite high; my estimates on a $450k purchase price suggests the buying costs to be around $30k+

If you're an entrepreneur or a small business owner with a scaling business, it may be better for you to invest your free cash flow back into the business. Even if the business is valued 3x less then the proposed investment property, it does not take long (with a scaling business) for it to catch up and supersede the investment property.

Make sure you sort yourself upfront because you don't want to be a forced seller. The transaction costs on an Australian property investment will lead to you losing $50k on a $450k property investment.

Finally, the get rich quick crew should stay out of property investment. If you're not willing to understand a 15-year plan, then it's likely you'll be disappointed. It's better to have a conservative plan that you achieve, rather than an optimistic plan where you lose faith in the strategy.

Best of luck with your property investment journey.