2017 is here and running smoothly so far!
Is one of your New Year’s resolutions
purchasing an investment property, or even to grow your property portfolio? If
so, here are five important things you should focus on to ensure you find an
investment which suits you.
1. Focus
on the long-term: Property investment is a long-term
relationship. The longer you can own a property for, the more likely you will
increase your profit from the sale. Most homes which sell for double their
purchase price are owned for an average
of 17.5 years. When you are looking for an investment property, keep in mind
the area you are purchasing in and find out if there is any new infrastructure planned
such as railways or universities, or even re-zoning. When searching for an investment property, focus on areas with planned improvements
which will help increase the property’s value.
2. Think
about what your motivation is to invest in property: Before searching for possible investment properties, you need to
make it clear what you wish to achieve from this property. Are you wanting to build wealth? Purchasing your first home? Or looking for a
financial future without needing to depend on your super? With this question
answered, you will then be able to narrow
down possible properties which will ultimately help you reach your goal. Suggesting
a property collection of high growth, aggressive style, lower rental yield would be useless if your current income will not
be able to facilitate these loans.
3. Look
past your local suburb: Take the time and research
the property market all over Australia, especially rural areas. Areas where the property market has collapsed but is
on the brink of recovery are a good place to invest in. Regional Australia has more affordable properties
compared to major cities and their rental
returns are still strong, especially if there are universities, hospitals or
planned new infrastructure in the area. It is very important to research any
new infrastructure plans for regional towns as this could suggest a possible
boom.
4.
Focus on the rental appeal rather than your personal preferences: When purchasing an investment property, you cannot make any
emotional decisions while buying. You are not going to be living in the property,
so it’s important to decide on a property based on the rental appeal rather
than your personal taste of the wall colours, etc. However, you should make
sure your investment property has a unique factor so that it will entice
competition from possible tenants. You are buying a property purely to make
money, so you need to purchase with your head and not your heart.
5.
Be realistic about cash flow: There has recently
been an influx of approved investment loans for new apartment buildings in
several major Australian cities. Therefore, you really
need to be realistic about the possible rental returns. It is important to
research the area you are planning to purchase in to ensure there haven't recently been another five unit blocks
approved on the same street. It’s important to be realistic about your current
cash flow position to ensure you find the best property that suits your budget
and current income.
