There are a number of things appealing about property investments. Not only can they serve as a great way to build your investment portfolio, but the financial return can be immense if handled professionally. Making the right decision with these property investment strategies are important.
While features and location are neat factors to consider, they’re not always important when it comes to property investment. To help you understand what we mean by this, we’ve decided to come up this detailed guide on what areas you should note prior to jumping into the market:
Make sure to do your research
Anyone who vaguely familiar with investing would know that understanding the market is the first step to any wise investment. In regards to the property market, this aspect holds very true.
For instance, prior to investing it’s important to take in as much information as you can in regards to current sales results and historical sales data. This kind of raw information will help you get a grasp on what is trending in the market, what has worked in the past, and what patterns have emerged.
Make sure you know your demographic
When researching, you should also factor in the kind of tenants you’re hoping to secure. Depending on their stage of life, your tenants might want certain things. For example, if you are looking to get families to move in, with kids bedrooms and backyards, you might want to consider the schools that are around and the playgrounds. If you’re looking for young couples with no kids, what transport options are there for them to get to work and where can they get together with their friends? These are all important factors to consider depending on your tenants.
Make sure to know your strategies
There are a number of different strategies in how you can earn a profit from the property market. While each one comes packed with their own pros and cons, if you planned accordingly, you could be in for some serious benefits from it.
Capital Growth Mindset
In this strategy, the expectation is that by purchasing a property, you’re certain that the value of it will increase over time. By doing this, you should note on the kind of approaches that you can take when implementing this strategy. If you’re in for a small to a medium timeframe for a piece of property, you could be holding onto it for at least a couple of years before selling it off for a profit. However, if you’re keen to wait it out for a longer duration, you should note the kind of ongoing projects that may appeal to potential buyers (more estates being built, public transport projects, etc). As you can see, this investment is relatively stress-free, and it’s only a matter of just waiting out for the property to grow in value. However, you should note factors such as maintenance and mortgage repayments will take some dollars out of your pocket throughout the process.
Renovation Mindset
As the name implies, in this strategy the expectation is that by purchasing this property, you seek to improve the value through maintenance and sprucing up aspects of the household. The idea of this strategy is that by fixing up eyesore households, that buyers will most likely be willing to purchase or rent them for more than before the repairs. If done correctly, with short renovations done in a quick time frame, it can be a quick profit to potential investors. However, if you’re spending too much money, there’s a likely chance you may earn little to no return from your efforts. This strategy, unlike the others, is dependant on a lot of different factors and could possibly not work.
Cash Flow Mindset
In this strategy, the main expectation is that investors earn money through rental income. The idea is that through tenants paying you rent, you’re earning more than the cost of rates and maintenance costs. This strategy is typically favoured among first-time investors. However, you should note that these types of properties are typically located in areas with lower capital growth. Depending on the outcome as well, you may find that there are no tax benefits when implementing this strategy too.
If you investing in a new house and land package or are looking to build a home on land you have already secured, there are huge tax benefits and generally, these homes are built in high growth areas. This strategy comes down to doing your research and speaking to the right people from the very start.
Six things you will need in an investment property.
Make sure you’re guaranteed a return!
Remember, don’t let emotion get the better of you. This is your time and money, so make sure all your decisions are based on sound logic and thorough research, rather than buying with your heart the way you would buy or build your own family home.
How can iBuyNew help
Need help getting started? iBuyNew will point you in the right direction! Whether you are looking for apartments, townhouses or house and land packages, working closely with an iBuyNew property consultant, who understands the market, will help you find something suitable that’s tailored to your needs and requirements. Get in touch with them on 1300 123 463.
1800 184 284
