Searching for an investment property?

There seems to be a common misconception that property values double every 7-10 years. Any property. Make your purchase. Hold it for 7-10 years, double your money. Job done.

While this may be the case for some (very) well selected properties, it is certainly not all, or even the majority of properties that will achieve this type of growth.

Regularly, people will ‘invest’ (more likely, speculate) in property around the corner from where they live or grew up because they feel like they know the area, or their friend told them it was a good buy. But what do they really know about the area, or the property itself for that matter?

To have the best opportunity of purchasing an investment likely to perform, we need to take a top down approach, starting at a state level and working our way down. This means looking at it in the following stages;

·       State

·       City

·       Suburb

·       Street

·       Property

Within these ‘groups’ are specific criteria or questions we need to ask ourselves to narrow down our search, ensuring we end up with a property that is going to form a piece of the puzzle that is your ‘end goal’.

Firstly, it’s important to understand that there isn’t just one property market within Australia. Each state is within its own place within the property cycle & even within each state there are different factors that affect the market.

When considering which state to invest in you may want to consider the following;

·       Where is the state in terms of the property cycle? Bottom, recovery, peak, declining?

·       Is the state predicted, by professionals, to outperform other states in Australia over the short to medium term?

·       What are the economic and political drivers occurring across the state

·       Unemployment rate?

·       Population growth in previous years as well as into the future.

·       The previous median price growth % (3-5 years)

When considering which city to invest in you may want to consider the following;

 

·       Vacancy rate (under 3%)?

·       high level of owner occupiers (Above 70%)?

·       Strong employment generators?

·       future area infrastructure spending?

·       Quality housing (minimal public housing)?

·       Area amenities (schools, shopping, public transport, parks & sporting facilities)

When considering which suburb to invest in you may want to consider the following;

·       Vacancy rate (under 3%)?

·       Area median house price?

·       Median rental yield for the property type you are considering?

·       What was the average price growth over the last 10 years?

·       What was the average price growth over the last 12 months?

·       What’s the predicted price growth over the next 5 years?

·       Supply and demand in the suburb. buyers or seller’s market?

·       How do they locals rate the suburb as a place to live?

·       Suburb demographic- average age, marital status, families or singles?

·       Owner occupier % (above 70%)?

·       Suburbs amenities (schools, shopping centre, public transport, parks & sporting facilities)

·       Renovation and/or development potential. i.e. price differential between renovated and un-renovated properties. Zoning of an area, min land size requirements etc.

When considering which street to invest in you may want to consider the following;

·       Comparable sales within the street?

·       Comparable values within the street?

·       Owner occupier demand within the street?

·       Quality housing within the street?

·       Is the street a main road or thoroughfare?

·       Location in relation to lifestyle drivers (water, beach, bay etc.)

·       Location in relation to amenities.

Finally, you are ready to choose a property!

throughout your research, inspections and due diligence process you would establish the following;

·       Optimum size and quality for the area?

·       Likely acquisition cost?

·       Rental yield?

·       Property condition?

·       Land content? (particularly important if investing in an apartment, unit or flat)

·       Land size?

·       Renovation/development potential?

·       Proximity to amenities? research shows some rules of thumb to be;

·       < 400m to parks

·       <10km to major retail shopping centre

·       <3km from a supermarket

·       <5km from quality schooling

·       < 5km from a train station

·       < 1km from a bus stop

As you can see, there is plenty of considerations to account for when trying to choose a property that is likely to outperform ‘the average’. The key to getting not only each of these steps but your whole investment journey right is to have a well thought out and planned investment strategy as well as a trusted team of professionals you can depend upon to guide you through the process.