A buyer’s advocates advice when it comes to purchasing investment property.

This may come across as very simple yet it’s surprising how many property investors get it wrong.

Property investors often buy in the right area but end up with the wrong type of investment property. Others buy the right type of investment property in the wrong area. Some simply overpay for the right investment property in the right area due to frustration and impatience.
It’s an investment property! You are supposed to care but not that much that you become attached. An even worse mistake is buying something or anything that you feel might be a good investment just so you can be done with it and have your weekends back. The best advice is to always be prepared to walk away from a deal. If it’s going to cost too much let someone else overpay. There will always be another one.

Property investment should be treated as a game. It’s like stalking prey. You need to be patient, resilient and most of all persistent. Too many investors go at it for a few months before they tire and have a break. When they return for a second or third round they learn of a great property that sold for less than what they would have paid. Another mistake made by property investors is to make a purchase out of convenience or because it’s easy to buy like an off the plan apartment or a house and land package in a faraway suburb with inadequate infrastructure. It’s no wonder these types of properties are easy to buy and you don’t have to compete for them like you do with established real estate.

1. The Right Property
Many investors believe apartments are the way to go when making a property investment. They were up until a few years back. Their growth was on par with houses and townhouses until recently when oversupply was negatively reflected in rental returns and capital growth. In the last 12 months capital growth for apartments recorded at 2-3% whilst houses and townhouses recorded 10-15% capital growth. If you can increase your budget slightly and move a suburb or two further out you should able to get in to a more ideal investment property. If you do buy an apartment make sure it’s an older apartment in a block built between the 1960’s and 1980’s, is in good structural order, does not have major upcoming works, has a good sinking fund, a limited number of apartments in the block and does not have exorbitant running costs.

2. The Right Area
Traditionally inner city areas surrounding the CBD were the strongest areas for investment and the outer suburbs were paid little attention. Nowadays investors are finding equal if not better capital growth and rental returns buying in some select outer suburban areas on smaller budgets. The suburbs to concentrate on are ones in and around recent infrastructure developments such as roads and freeways, public transport, schools and shopping centres. Infrastructure developments such as these lead increased accessibility as well as lifestyle improvements which drive demand by residents wanting to own and lease property in these areas which stimulates capital growth and rental returns. Don’t buy in an area where an infrastructure development is promised as it may not proceed.

3. The Right Price
You make your money on a property when you buy. We live and die by this statement. The rest is up to the market and improvements you make to a property. The better you buy, the faster you gain equity and the faster you can leverage to buy your next investment property. Buying property is easy. Buying property well is difficult. Anyone can be the last man standing at an auction with a massive budget but who wants to overpay? Particularly for an investment property. You don’t mind paying a bit above the odds for a home that you’re going to live in and love for the next 10, 20 or 30 years. When purchasing an investment property your budget needs to be strict and based on diligent research. Obtain property reports with comparable sales and rental data and complete a thorough property investment analysis. You can subscribe to or purchase this data as well as purchase a PIA program.

Before you throw in the towel or make a costly mistake consider an obligation free discussion with IPB. We’ve been buying property successfully for investors and home buyers for eleven years. Where smart buyers come to buy. www.ipb.com.au

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