When to Buy an Investment Property
The most important principle to remember when Investing in property is to think long term and have an educated written plan that you adhere to.
When to buy is nowhere near as important as actually buying a property, a trap some investors fall into is waiting for the market to fall so as to grab a bargain.
Inevitably what happens is the market increases and then they say:
"I should have bought last year when the prices were better, I think I will wait for a fall in the market."
and when the market softens they will say:
"I think I will wait for it to hit rock bottom."
all the time missing opportunities to enter the market and grow their wealth, not to mention the tax savings they are missing when all this is happening.
The properties we provide for our clients are always built by the most respected developers and builders in what we consider to be the best areas to accommodate capital growth and maximise depreciation benefits.
When looking at the figures supplied by the Australian Bureau of Statistics you see that on average property prices have doubled on average every 7 to 10 years for the last 50 years.
When considering this and also the fact that it is impossible to know when prices are at rock bottom, we say:
"Now is the right time to buy an Investment Property".
Selecting an Investment Property
The 2 main aims we have when selecting investment property for our clients are Capital Growth and Property Affordability.
Some people will tell you to buy land or a house as this will have the best capital growth, in some cases this is true. We must, however, also consider affordability; you don't receive an income from land such as "house blocks" and thus in most circumstances can't claim any benefits or costs associated with holding land over time.
Older homes are generally a fair investment however will probably give you more troubles regarding property maintenance and cost you more to hold as generally the gearing returns are nowhere near as good as a new house and land package.
We will generally recommend apartments, townhouses, house and land packages and in all cases NEW as they have higher initial returns compared to older properties and are also easier to maintain and easier to let as there is a larger pool of tenants looking for quality new properties.
We have found that in some instances investors on an average income can buy a new property in suburbs within close proximity to schools and amenities and have it cost them as little as $20 to $40 a week after their tax benefits without noticeably affecting their cash flow.
It is also important to note that you should consider your property ownership options when deciding on what to buy and who's name to put it into.
Where to Buy an Investment Property
One of the biggest problems Investors face when looking at buying an investment property is "Where do I buy?"
We always suggest you look at historical data and consider the pattern of capital growth over the last 10-20 years to establish whether or not the locations you are looking at are worth consideration.
We must remember that the goal of investing in a property is to realise strong long term capital growth, whilst keeping the investment property within our budgetary requirements.
We have found that the locations that hold steady long term growth are generally located within growth corridors and new satellite cities.
These suburbs have had good growth over recent years with consistent demand from tenants due to their proximity to all amenities infrastructure and jobs. Shops and public transport are also always worthy of consideration.