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Nine Rules to Investment Property Success

The rules we followed when investing in the property market fifty years ago may have changed but the desired end result is still the same – to build wealth and a financially stable future.

There are nine basic rules to succeeding in today’s market and while some, such as picking a great location, haven’t changed, there are others that are a result of modern times and economic downturn.

Renovating instead of buying is one such rule that relates to our changing economy. At the end of the day, as long as you get the best deal you can and leave your emotion at the door, you’re off to a great start. Read more....

Things have certainly changed over the past fifty years in the property market. 
 
Homes have undergone substantial design and structural changes, household income has increased and interest rates have fluctuated immensely, all of which play an important role in the cost of home ownership which we are experiencing today.
The rules we followed when investing in the property market fifty years ago may have changed but the desired end result is still the same – to build wealth and a financially stable future.
Here are nine basic rules to consider in today’s market:
 
Never forgot the golden rule – location, location, location! The trick is to pick a location that will best appeal to tenants with proximity to transport, amenities, schools etc. This will increase your chances of securing long-term tenants and a solid rental return.
  1. Avoid investment properties that provide too many amenities that could become costly to maintain. Things like pools and spas may seem attractive but the tenant is unlikely to pay the high costs associated with covering the cost of maintaining these luxury items.
  2. Stick to smaller unit complexes. The sheer volume of units in large complexes could cause problems when you decide to sell as there may be alternatives on offer in the same building causing price pressure and increased competition.
  3. Know the area and its demographics. If your investment property is in a suburb full of student housing, make sure your property is close to the education campuses with easy access to public transport.
  4. When buying a house think about future plans for the property. Is the house on a large block that can be subdivided later if desired? If you have no wish to do so, look for a property on a smaller block to keep maintenance requirements at a minimum. Remember it’s the house, not the land, which will provide the majority of rental return. 
  5. A brand new house is like a brand new car and it carries a premium so if you are investing in a new property, make sure the quality of the design and the standard of finish is worthy of a higher rent. 
  6. When the market has limited growth potential, it’s a good idea to seek out alternative means of generating profit such as buying an older property and renovating it. Look for properties that don’t require major structural changes, just a kitchen or bathroom renovation (or similar). Carrying out these sorts of improvements can result in better rental return and capital profits as long as you don’t go overcapitalise.
  7. View any property without emotion and see it as nothing other than an investment. Forget what you’d like in a home and think about what a target tenant will be looking for. 
  8. Try to get the best deal you can for the property. The less you pay, the better the return will be from a capital gain and rental yield perspective.

 

Finally – don’ t be afraid to ask for advice! There are plenty of advisors and experts out there who have plenty of ideas and suggestions so don’t be afraid to ask to ask the hard questions and think before you jump into anything. Good luck! 

 
DISCLAIMER:This information is of a general nature only and does not constitute professional advice. We strongly recommend that you seek your own professional advice in relation to your particular circumstances.