Have you got the equity for an investment property?
There’s a lot of talk about ‘Releasing Equity, ‘Investment Properties’, ‘Negative Gearing’ at the moment and I for one am not to sure what it’s all about. Especially the negative gearing bit. Fortunately there are people out there that can help us with all of this and here’s one.
This post is brought to you in association with Templeton Property. These guys know what they’re talking about better than I do so i’ll let them explain it all. I’m reading along too and will offer my take on what they’re saying at the end. *Disclaimer – I am in no way a property or financial professional and do not in any way offer my advice as such. You should only use these hints and tips as part of your own process.*
Property is widely considered to be one of the safest investments, but to ensure the maximum ROI there are a range of things that should be looked at before buying. For those looking to achieve the best possible growth, there are number of strategies investment property specialists, such as those at Templeton Property or other agencies, may suggest. They include:
1. Investigate Suburb Profiles and Sales Data
When looking for a location to buy, one of the best things investors can do to predict the future is to look to the recent past. This will give insights into whether suburbs that are being considered have recently experienced price rises or are overdue for price growth. Property markets are cyclical and buying at the high point of the cycle usually means it will take longer to experience price growth. Depending on how long the investor wants to hold onto the property, this can influence purchasing decisions.
It’s also essential that investors do their research and shortlist suitable suburbs based on data. Often areas that border suburbs that have enjoyed a recent price boom will follow suit, or areas where there are solid job opportunities. Locations where big-ticket infrastructure has been planned including shopping centres, hospitals and transport links are traditionally reliable indicators of future price growth.
FLD – A good example of this would be the Frenchs Forest area on the Northern Beaches. The surrounding suburbs have risen in price over the last few years and now they’re building a great big, shiney new and sparkly hospital! *Disclaimer – DO YOUR OWN RESEARCH!
2. Assess Rental Appeal
Investors should always study the demographics of areas where they are looking at buying and buy properties suited to the needs of renters. One of the biggest mistakes investors can make is buying based on their individual tastes, rather than the needs of those who are likely to rent the property. A thorough rental assessment should look at rental yields and how they relate to loan repayment expenses, what other rental stock is available in the local market, and the general demographics of the area. If an investment apartment is being considered, assessing the body corporate fees and other costs should be accounted for.
To ensure continued occupancy and premium rental returns, investors should always buy properties with features that appeal tenants. This can mean different things depending on the demographics however air conditioning, garage spaces, and internal laundries, and locations close to transport links but away from busy roads are all generally sought after with renters.
FLD – Also, locations close to Universities were popular in the UK and I would expect the same here but again, DO YOUR OWN RESEARCH!
3. Look For Demand and Avoid Areas of Oversupply
Too often investors find themselves competing with scores of others when trying to lease their property or when the property goes on the market. While it’s impossible to predict the level of available housing stock when it’s time to lease or sell the property, investors can shield themselves somewhat from competition and from other investors by buying in areas of high demand but have limited supply.
When buying an investment apartment, oversupply is an important consideration, especially if many similar properties in the complex will be up for rent at the same time. Where possible, buy apartments in smaller complexes and look for apartments with unique features compared to other stock in the area to avoid having to drop the rental price to occupy the property.
Any successful investment decision starts with strong research and an understanding of the local property market. There are many different factors that should be considered when buying property, and apart from the abovementioned, the unique characteristics that are specific to the local market always need to be assessed.
FLD – I guess this works 2-fold sothat you can rent it easier and also possibly sell it easier if you need to later on. Once again – DO YOUR OWN RESEARCH
There are many things to consider when looking into this kind of thing and if we get to the position where we’re able to purchase an investment property then we’ll definately be looking to get some advice from the professionals.
Have you got an Investment Property? If you do then i’d love for you to share any advice in the comments below with the other readers.
Thanks for reading.
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