Get your property investment right and you set yourself up with an income for life, as well as valuable assets to pass on to your children.
Many property investors make poor choices, simply because they fail to do their due diligence.
The solution is easy. Find a respected property investment specialist and ask these 10 important questions.
This will help you hone in on a great deal and make a sound, enduring property investment to future-proof your family wealth.
If you overpay for investment property, you’re eating into capital growth and serviceability before you start.
First-time investors find it hard to judge the true market value of advertised properties – especially when buying in unfamiliar areas, opting for doer-uppers which present as a bargain (but are actually just money pits) and falling for city apartments already in over-supply.
Price itself is not always indicative of a good investment. You need to work out rental yield and serviceability to determine a property’s true long-term potential.
When considering an optimum property investment, don’t be tempted by expensive houses in desirable residential areas – the kind of house you might like to live in yourself.
You are more likely to find a sound investment in developing growth corridors where rental return is relatively higher.
This will improve your income and cashflow, making it easier to service your investment and leapfrog on to your next property.
While property investors have traditionally chosen capital gains over rental income, the balance is shifting in today’s market.
With the possibility of median house price growth not always strong in the majority of Australia’s capital cities, it makes more sense to invest for income rather than relying on capital growth.
The Residential Property Prospects 2016 to 2019 Report by BIS Shrapnel indicates pockets where prices may reduce. In some suburbs, a predicted drop in house prices of 1% in Sydney, Melbourne and Perth, and 2% in Adelaide and Darwin, is possible over the next three years.
The beauty of cashflow-positive properties lies in their ability to provide a passive income for life as well as the capacity to go on building your property portfolio.
Buying into an area that may have periods of over-supply in investment property will delay the growth cycle and potentially reduce rental returns.
With so much competition, you could wait months to fill your property. You’ll need to be prepared to reduce your asking rent to attract a tenant.
To top it off, the value of your investment may adjust slightly downward. This will reduce the equity available to enable you to go on building your portfolio.
Tenants are attracted to areas with good amenities, affordable housing, jobs and access to public transport, so make your choice carefully.
Remember the days when property investors were told to buy within 10 kilometres of the city?
Well, times have changed. Today’s hot investment properties are more likely to be outside the inner ring or in regional areas which are demonstrating strong infrastructure investment and economic growth.
While Melbourne and Sydney are suffering from a glut of inner-city apartments, regional hotspots like Geelong and Bendigo in Victoria, Newcastle, Central Coast and Hunter Valley in NSW, and Toowoomba and the Sunshine Coast in Queensland are experiencing significant development and demand.
With international and interstate migrants flocking to these areas in search of affordable housing and better job prospects, the figures also stack up for potential property investors.
The best time to buy is yesterday or last year! In reality, though, the best time to buy is as soon as you’re ready.
This is determined by your life stage, objectives and level of equity and income available to service an investment property.
A property investment specialist can help you assess your level of readiness and refer you to helpful professionals such as financial planners and mortgage brokers.
Property remains an enduring asset choice for Australians, with CoreLogic figures showing total property returns – including increases in value as well as gross rental returns - at a whopping 13.9% for the year to May 2016, as reported by The Real Estate Conversation.
Yet Cameron Kusher of CoreLogic is cautioning investors to look for solid rental returns rather than capital growth when considering property investment.
“A more balanced investment approach which focuses on moderate capital growth and relatively strong rental returns is likely to be a superior housing investment profile over the coming years”, he says.
With access to pre-release properties, you get to choose prime properties which are normally snapped up well before hitting the market.
Priority access through a respected property investment specialist can open up a world of choice as well as a range of possible benefits including:
This can make the difference between a mediocre investment you struggle to service and a premium investment offering great cashflow and further investment potential.
What suits another property investor might not suit you. Your property investment strategy needs to be tailored to your unique life goals, aspirations, lifestyle and circumstances.
It’s essential to identify short, mid and longer term goals in order to draw up a plan which allows you to fulfil your dreams. Consider if you want:
Your property investment specialist can work with you to identify your individual objectives and the best way to achieve them.
Investment Property Matching (IPM) lies at the heart of every successful property investment strategy.
IPM takes both luck and sentiment out of the selection process, instead relying on finding precisely the right property to fit your strategy, pricing point and location.
The Build Wealth With Property IPM process provides clients with a short list of properties all matching these specific criteria.
If a suitable match isn’t available, property can be pre-ordered to meet your particular strategy and needs.
With 73% of investors getting stuck holding just one property, this is a very valid question.
The answer lies in Build Wealth With Property’s Investment Property Matching and strong cashflow property options. Dual Income Properties (DIPs), for instance, offer smart buyers a double rental stream from one property and title.
The positively geared style of property offers sufficient cashflow to enable you to pay down existing debt, including your mortgage. This allows you to move on to your next investment more quickly.
Premium DIPs are snapped up by canny buyers off-market, so it’s important to register your interest to give yourself the best possible investment choice.
There might be plenty more questions you want to ask, and we’re happy to provide the answers.
Contact us today to start the conversation.