Property Investment 10 Factors That You Need To Know About - The Emporium Barber

Property Investment 10 Factors That You Need To Know About

property investment

You've heard of Harry Trigubof, right? Old Harry “High Rise” property tycoon extraordinaire who sits second on the Financial Review Rich List 2017 and is worth $11.4b.

His Meriton property development group dominates the Sydney skyline - you’d have seen his cranes lit up at night with the brand name on the arm.

Well, did you know when he started off he had to build his own house as his builder kept letting him down? This is the man who said, “It’s been very gratifying to see that I was able to start from very low beginnings,” and now he is a multi-billionaire.

Wanna be like Harry? Then what are you waiting for?

So you've done your hard graft, and now you've got a bit of spare coinage to start buying property, but do you know anything about choosing a property and how to get started?

property investment

Scott McAndrew, Director of McAndrew Group who specialise in property development, believes before you even start out you need to polish up your knowledge and be aware that this is a risky business.

“No investment, including property investing is without some form of risk. The trick is to get sufficient knowledge to minimise the potential downside and maximise the upside.”

“The income from one unencumbered investment property may double your income at retirement”

“One of the biggest failures for not building a successful investment property portfolio is partnership breakdowns”

Of course, there are numerous other things to take into account of with property investment, and you will get a ton of advice from your mates and family, but you need to stand firm and sort the wheat from the chaff.

beach house property investment

The very first thing you need to do is figure out your investment strategy and your budget. At the moment home loan interest rates are low, and it's an ideal time to get into the property market once you determine how much you’re comfortable borrowing.

Once you have determined how much you can borrow it will give you an idea of the type of property to look for and where, so you can determine property potential. If you only have $500,000 from the bank, there is no real point looking at property in Manly.

You need to match your cash-flow with your suburb understanding, that what matters is whether the property will make a return investment.

1. Stake Out The Neighbourhood

No one with any sense merely jumps online, sees a property and makes an offer without walking through it or checking out the area. Learn the lay of the land and do yourself a favour by putting leather to pavement and walking its mean (hopefully not!) streets so you can make good decisions based on the facts. Get a feel for the area. Stick your head in the local shops, restaurants and pubs and ask what it's like to do business in the community. Perhaps you know someone or a mate knows someone that lives there so you can speak to them. It's a great way to learn what the area is all about from the locals.

Jeez, they might tell you that the house next to your potential property is notorious for noise, late visits from dodgy characters and the Police. You don't want an investment you can't sell when you find out too late what the neighbours are like. This is one business you don't want to make poor investment choices on when considering a potential investment property.

check out the neighborhood

2. Remember What Your Mum Said: Do Your Homework

You've got to do your homework, so get ahead by asking a real estate agent property-buying questions that will get you a greater understanding quickly of your potential property.

One of the common ways people make a mess or miss out on property deals is by not asking the right questions and this is all part of the property-buying experience.

Things like: 

  • What was the last sale price of your target property
  • Are there any major infrastructure projects happening in the area, as you will need an understanding of
  • Local development plans
  • How many bedrooms should a property in this area have: one, two, three, four or more?
  • What is the suburb yield median and what is the property returning?
  • Why do the owners want to sell?
  • How long has the property been on the market for?
  • What are the current average days on the market for a property in the area?

Even better still, run a sales comparison. Before you even work with an agent, you can find out what properties have recently sold in the area that matches up with the size and amenities of the property you're considering buying.

the landscape of a beach house

3. Analyse, Analyse, Then Analyse Again

You work in business so have a great understanding of what due diligence is. A company takeover doesn't just happen, a team of advisers analyse the minutest detail and present their results to the Board.

You need to do this too.

One quick and efficient way is to obtain local statistics. How does the town compare with other nearby localities? Is your potential property in a quality area that has a good local school, perhaps a shopping mall?. If not how far away are these? What are the residents doing? Are they working or on the dole? Does the area have the potential to grow, maybe it's an up-and-coming suburb? What about the property itself – what is its potential? What are the current expenses of the property? Is there room to expand or does it already fill the block of land it is on? Can you convert it, perhaps? What is its future market potential?

Analyse everything until you are comfortable as it's an important aspect in acquiring an investment property.

analyse the surroundings

4. It's The Ultimate Game Of Monopoly

Why are you in this? Why are you thinking about buying an investment property? Are you thinking about securing your financial future? Is your primary concern to generate regular income from renting out your property?

If so then you might have to re-assess the places you are looking at and where you look as ideally, it would want to be a zone with high rental yields. Make sure you know the properties true rent potential before you get involved. This is where it is handy to have done your due diligence as you should be all over the area's rental demand and its demographic profile

Perhaps your plan is to earn money through capital growth... in which case you should be searching places that have both a good record of capital growth and high potential for more in the future. Again here is where public schools, shopping, entertainment and transport come in. Be on the lookout though for any area that has achieved high capital growth but is reliant on a single industry to sustain it. What if that trade leaves the area?

monopoly money

Or perhaps you are brave enough to buy a property that requires renovations so that you can sell it on for profit. How much you invest in this will now have to be determined and how much time to do it. Can you cope if it does not sell immediately? This is all part of the cost of owning an investment property.

After all these points here are taken into consideration at the end of the day, it may well be worth paying for a suburb report that will give you a more detailed breakdown if the property you've chosen ticks off all the boxes for your property investment criteria. Remember if you do this right it could be a better financial investment than the stock market.

5. In The Market For A Car Park Space?

What are you looking for? A unit? A detached or semi-detached house? Or perhaps a townhouse? 

Let's hope it's not a parking spot in Hong Kong where one recently sold for $900,000 .

Again this all comes back to your budget, the area and what strategy you wish to employ. For instance, if a location has a high demand for a townhouse why bother buying a unit? If you are looking at purchasing in the heart of a suburb where it's all late cafes and bars, then a unit is a perfect property to invest in. Same as if you are looking at a zone near a University – you want to concentrate on bedrooms as opposed to a lovely back yard with a swimming pool for the kids.

These could be factors important to your potential renter or buyer in the future.

expensive parking lot

6. There's No Such Thing As Love At First "Site" In Property

Finally don't be afraid to say 'no.' There is no pressure here on you at all and there is no point being too emotional or too analytical. It's not like you have three kids under nine and are desperate to get your family into a good home. You have the upper hand here and if you don't like something you can easily walk away. No amount of badgering from an agent should ever make you purchase a property you have not done due diligence on and are a bit wary of it.

This is your cash, not theirs and any financial transactions will be on your terms. 

There are plenty of homes out there to look at; some will come up at a later time that are not on the market at the moment. Time is on your side, it most certainly is not on theirs; they need to make a sale to get their commission.

This process is how we learn and make decisions if we wish to make a sound financial investment, so you can use both emotions and logic to make decisions if you want to become a successful property investor.

dubai property

Finally, Real Estate Agent Michael Hardy from PRD Nationwide says of property investment: 

“While time is on your side don't miss an opportunity by being slow. With the current market conditions good properties get snapped up quick, so be the BOSS and act swiftly on the decision you make.” 

If all fails and you are unable to find a property to invest in, you could always start buying up old handbags. This one recently sold for $400,000.

To join Harry Trigubof on that Billionaires list all you have to do is sell 27,500 of those handbags.

That should keep you busy.


Trent Pridmore
Trent Pridmore

Author



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