Author: Mark Watson

Location Location Location

As the saying goes Location Location Location. Buying an investment property especially falls under this saying. Buy a property in the right location and expect to have a good rental yield, equity growth, and less vacancy periods.

A Common Rookie Mistake by First Time Investors

Most first time investors look for a property in a suburb close to where they live (if not the very same suburb). Usually this is so they can keep an eye on it by doing regular drive byes. Rarely will this be the most effective approach at picking a property. (And as a side note here – remember just because the tenant is keeping the front lawn mowed, doesn’t mean they are not punching holes in the walls inside!)

Reduce the Risk = Sleep at night!

Remember – Property investment is a business with real assets to manage. By purchasing it correctly (see the correct way) you aim to reduce the risks of holding your assets. (So that you can sleep at night, even if you have assets in other states!)

Research

Some of the important characteristics when researching regions to invest are:

Diverse economy with jobs in multiple industry sectors. – Beware of single industry towns! i.e. There may currently be a huge demand for rental properties in a town in the middle of nowhere that has a big mine in operation. The big mine is happy to pay well above market price to house their employees. But… as soon as that big mine decides it’s not viable for them to continue to operate, they close up shop, lay off their employees and the these people will usually move back to where they were from or to where they can now get work. Leaving you with empty rental property that you still have to pay the mortgage on.

Growing Population – if the population is growing in one area more than another than the higher growing area should be the most appealing to an investor. More people means more homes are needed to house the people.

Key infrastructure and facilities that people look for. Look at what’s available in the town you want to invest in. Are there schools close by (day-care, primary and secondary)? Are there shops close by? Public transport? Is there entertainment close by (movie theatres and concert halls)? Are there skate parks, libraries, universities? You get my drift. Your property will less likely be left vacant if it’s in the right location. Tenants like to enjoy being local to all the same places you do, so think about what is in the local vicinity and if you’d be happy to live there yourself.

Demand for property or vacancy rate. Look at what’s currently available to lease in that town and the price. Speak to some of the real estate agents in that area but also speak to the property managers that work in the real estate agents. They will be able to tell you the vacancy rate for properties in the area as well they may be a little more honest than the actual estate agent or developer trying to sell you the property. They are often very willing to help you as if you do buy in their area they would also like to win your business by managing the property for you.

Future business or government investment in area. Look at what business are opening in the area. Big businesses (the likes of Woolworths and Bunnings) do lots of market research in an area before they spend their money and open a store in that area. Chances are if there is a new Bunnings, Woolworths or the likes opened or about to open in that area then it’s a thriving area and money to be made there if you pick the right property.

When picking your next property remember to think about the above characteristics. It’s all about location location location! Contact us at Planning Property Wealth and let us help you find the right property for your needs.

What You Can Do Differently

To be successful, you must commit yourself to learn the tools that will help you take control of your time and wealth.

Build the Right Team

Use professionals who can demonstrate their Independence or Transparency of ‘Why’. Pick professionals for your team that either do what you want to do themselves or work with people doing what you want to do.

When picking your team question the skills and experience of that professional. Tell them what you’re planning on doing and wanting to achieve and ask them how they can help you on your journey. If you know of anyone else with similar investing goals – ask them about which professionals they use. Word of mouth can be a great starting point – but arrange a meet and greet (either by telephone, skype or in person) so you know you’re comfortable with that person yourself.

Don’t trust just anyone with your wealth. It’s a good idea to build your team before you need actually need them. That way you know who you will use and trust for what services. i.e. – If you find the perfect investment property to purchase you want to be able to tell the real estate agent which solicitor will be acting on your behalf.

Do Your Due Diligence

Lack of research or planning may result in the wrong type of investment that suits your individual circumstances. Research, Research, Research.

Prove to yourself why this property is right for you, but don’t lie to yourself or buy with emotional ties. And don’t just buy a property because some want to be real estate property spruiker talked you into it. By all means listen to what they have to say but then do your own research as to if this property is going to help you on your journey. If it really is as good as they said it was, you will come to that same conclusion after you’ve done your due diligence and then purchase.

Protect Your Assets

*WARNING* – Not all policies are the same

Your property portfolio should include Building, Contents and Landlord Insurance protection to help protect your assets and potential losses.

Read the fine print and again ask all the right questions as not all policies are the same and it can be an expensive lesson to learn if you need to one day claim on this insurance to find you are not covered.

For advice on what you can do differently to succeed in investing with property contact us and we will be happy to give you some guidance.

Investment Horror Stories Are Avoidable!

We’ve all heard the horror stories of people getting stuck with a poor investment or having troubles with their property. Actually in most investment horror stories the tenants are usually the main subject. (We’ve all seen the ‘Tenants From Hell’ type stories on A Current Affair or Today Tonight, where they have skipped town, after not paying their rent for months and trashed the place before they left.)

But – it doesn’t have to be this way, with the right steps taken to protect your asset and all round wealth.

Be Informed

Ill informed investors can fall victim to questionable property spruikers who may not be transparent or independent in the service they provide or consider how a particular investment fits you and your needs.

For example, purchase of a one bedroom apartment in an area which has strong demand for 4 bedroom homes, may greatly affect your ability to tenant and grow value in the asset.

Don’t Believe All the Hype

Unfortunately some property spruikers will still encourage you to buy this sort of misfit investment if it’s all they have available in your price range – even though they are aware the demand for the 1 bedroom apartment is not there.

Planning Property Wealth was born as a result of the founders passion to take more control, understand property can maximize wealth and included his desire to provide others an opportunity to walk the path that suits them.

Avoid an Investment Horror Story of your own. Talk to us to find out more about how we can assist you on your path.