Previously known as “The Property Planner, Buyer and Professor”
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Show Notes – Avoiding bad property investments
This week the Property Trio field two great listener questions.
Buy Now or Save More?
Max, a young investor weighing his options for a second property, asks: Should I buy now at 90% LVR and pay lenders mortgage insurance (LMI), or wait until I save for 80% LVR and a lower rate?
Getting in Sooner
The Trio discuss how buying at 90% LVR can bring a purchase forward by one to three years, giving valuable time for capital growth.
While LMI and slightly higher interest rates add costs, these are often outweighed by early market entry, provided investors maintain cashflow buffers and commit to a long holding period.
Avoid the Cheaper Asset Trap
The Trio warn that buying a lower-quality property just to get in sooner is risky.
Compromises in location, dwelling type or fundamentals can significantly underperform over time.
Even small differences in annual growth rates can compound into major wealth gaps.
A Big Decision on Dwelling Types
The second listener question is from Peter, who’s weighing up what dwelling types to invest in across Melbourne with a budget of $500k–$650K.
Peter also asks whether a new build in Perth could deliver stronger long-term returns.
Pitfalls of Overpriced New Builds
Peter shares that he’s been pitched house-and-land and townhouse packages by property investment groups, only to find they’re priced $50k–$100k higher than local builder offerings.
This raises red flags for the Trio, who unpack how “introducers” and commission-driven sales can inflate prices and compromise buyers’ outcomes.
They warn of the dangers of overpaying, the poor land-to-asset ratio of new builds and the risk of investing in stock that lacks scarcity or uniqueness.
Oversupply & Capital Growth
The Trio explain how oversupply in fringe estates puts capital growth under pressure.
When developers keep releasing new stock, yesterday’s shiny home quickly becomes tomorrow’s dated dwelling.
Buying brand-new, whether in Melbourne or Perth, comes with hidden risks, from inflated valuations at settlement to lower demand from owner-occupiers down the track.
Alternative Strategies
The Trio suggest exploring established units and boutique apartments in well-located Melbourne suburbs, where buyers can tap into amenity, strong transport links and genuine scarcity.
Gold Nuggets
Cate Bakos’s gold nugget: Buyers need to understand and apply land-to-asset ratio to every purchase.
David Johnston’s gold nugget: I would prefer people get into the market sooner rather than later if they have an appropriate budget, especially given the market we’re in with rates falling, the deposit scheme just increasing, prices rising already. And as I touched on, I expect prices to rise at a faster rate in 2026.
Resources:
- #16: Unpacking land to asset ratio
- #58: Off the plan purchases – Everything you need to know. Part 1: Purchase through to settlement
- #59: Off the plan purchases – Everything you need to know. Part 2: The financial drivers
- #60: Why established properties outperform
- #243: Building Long-Term Wealth: Mastering Land to Asset Ratio & Paying Down Your Home Loan Vs Investing Surplus Cash Flow
- #303: Avoiding Property Investment Traps – Off-the-Plan Risks, Market Timing & Spotting Property Spruikers
