BUYING PROPERTY AS AN INVESTMENT


Investors in property range from serious full time professionals, to those diversifying their portfolio to individuals, making once off second property purchases. The largest property investors of course are the large corporates who manage listed property companies and property unit trusts. The smallest of course is the general homeowner who owns their own home - this is indeed an investment.
 
Over recent years, there has been a remarkable growth in smaller investors who have begun to realise what the big boys have known for years – with the right buying decisions, property will beat most other investments with good and sometimes phenomenal returns. They are replacing traditional endowment and other policies with property investment as part of their retirement planning.
 
As opposed to stock market investment, which is based essentially on emotion and opinion, property investment is based on real tangible value – which will constantly rise.
 
Most things in life are better if you take the time to plan and prepare for them.  It shows responsibility, forethought, consideration, anticipation – a common success factor in many areas.  Investing in property is no different, yet we often see regular investors burn their fingers when they have failed to consider the basics before purchasing a property.
 
GENERAL PRINCIPLES
  • Most people choose residential property investment ahead of other kinds of property because they are familiar with it and feel comfortable investing in it. It is important to stay reasonably within your field of knowledge. However, it may also be worthwhile considering a commercial or industrial property investment. This is a specialist area and advice should be sought from a specialist commercial agent. For more on Commercial investment go here
  • Give yourself some time to watch market cycles and movements in property values before putting yourself in the hands of the experts. Take your time is discussing issues with your agent. Beware of property investors drawing you into their own schemes – they have a vested and therefore biased interest. 
  • Classic style properties of quality construction generally hold their appeal longer. Also important is to consider smaller issues such as properties with security features such as door and window screens, alarms. Double garages are very popular 
  • An investment property has noting to do with what you want and everything to do with what clients want. You DO NOT invest in a property because you like it but because it will offer a return. Find out what properties are most popular and have the most seekers. Avoid specialist properties and top end of the arket where renters are few. You want to be able to replace your tenant easily. 
  • While the aesthetic appeal of a home can affect the rental value and vacancy rate, the location of the property will also affect its profitability. Homes close to schools, shopping centres, and public transport, or located in fashionable suburbs, tend to be more desirable and may command higher rents. Tenant are not investing – they are looking for comfortable living and convenience. 
  • Focus on areas with a good track record of capital growth. Capital growth tends to run hand in hand with good infrastructure. Look for streetscapes that are architecturally consistent rather than a mix ‘n’ match of styles.  
  • Consider unique specs relevant to a particular area you are looking to invest in. For instance, off-street car parking is a bonus, particularly in inner city areas. High security measures in higher crime areas
  • Look to fresh approaches such as buying development land jointly with others - each has a small investment and when the time comes (patience is key) tidy profits can be made.
Relevant Articles
Property Investment Advice from Professionals
Key Considerations in Investing
Investing in Commercial Property
Rental vs Buying
Professional Property Management



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