Picking a Good Investment
1. Look beyond the current ‘Hot-Spot’ to the next neighbourhood on the way up.
Unfortunately that ‘location to watch’ has most likely already passed it’s invest-by date. Look at what made it so appealing and predict where might be the next area to turn the corner.
2. Settle on the rare find, rather than one of the many.
Choose an investment that can’t be easily matched in the market. Perhaps an enviable inner-city location, or a unique apartment in a small block. When it comes time to sell you will be better placed in the market if there isn’t another property quite like the one you have to offer.
3. Go where the jobs are.
You might be monitoring the property websites, but how about the employment classifieds? Tenants and prospective owners all value a home close to their place of work. Keep an ear to the ground for expanding commercial areas with pubic transport to surrounding suburbs.
4. Value vacancy rate data over population growth statistics
There can be many reasons for population growth, and you need to look behind the statistics. If in doubt, it usually pays to seek out areas where property turnover is low, with a good proportion of owner-occupiers to renters and a diverse range of accommodation.
5. Discounted properties are not always a bargain
It can be easy to forget that a sizable price reduction might not be a great opportunity. Focus on what comparable properties actually sell for to figure out if a property is on offer under the actual market value.
6. Invest in the property, not the neighbourhood.
Don’t be encouraged to buy a dubious property just because the area is on the up and up. And don’t miss a great property in a less exciting area. While the location is important, focus on the underlying value of the property itself and its potential for capital growth and rental returns.
7. Patience is always a virtue
Warren Buffett has said that “the trick is when there is nothing to do, do nothing.” When you are keen to invest, it can be hard to sit on your hands and wait indefinitely. But of course sometimes in the ever changing property market, this is just what you should do.
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