Thinking about purchasing an investment property? Keep these three top tips in mind…
Blogger: David Johnston, founding director, Property Planning Australia
If you haven’t purchased an investment property yet, you still have the ability to get the most important aspect of any investment right. That is selecting a high quality investment asset right from the start. Some of the most important factors you need to consider to ensure you maximise your return on investment around the asset selection are:
1. Every individual property is different
Most media commentary suggests or assumes that the property market is one market place and therefore every property ‘product’ performs in the same way. The reality is that every property is unique and therefore will provide different returns over time. Understanding the micro factors of individual properties is vital, especially when most of the information provided in the media is about the macro property environment.
Properties in the same city, suburb, street and apartment block can be completely different and therefore provide different investment returns. Keeping this fact at the forefront of your mind will take you a long way towards making better property investment decisions and make it easier for you to isolate important information into your decision making process and ignore the less relevant information.
2. There are critical factors that differentiate outperforming properties
How do you spot the micro factors to ensure a superior return on your investment property? Look at the common elements amongst properties that have outperformed the market over the last 20, 30 years and so on. Understanding history usually provides us with a greater insight into the future.
Finding commonalities around historically high performing properties will ensure you select an investment that is less likely to disappoint. Consider what links the properties that have outperformed the market historically.
Some critical factors to assess are the suburb, pocket of suburbs, street, streetscape style, activity in the street.
Architectural style and neighbourhood character, floor plan, land to asset ratio, local amenities, aspect, natural light and access to public transport.
3. Seek expert advice
Discuss your strategy with a property planner or buyers advocate who specialises in helping people develop property investment strategies for a living. To be an expert in something we usually need to be focusing on it day in day out. One of the biggest challenges with obtaining advice is actually sorting out how is providing a great advice and who isn’t!
About the Blogger
David Johnston is the founding director of Property Planning Australia (PPA) and co-author of Property For Life - Using Property To Plan Your Financial Future. Property Planning Australia was established in 2004 and is a multi-award winning property, finance and financial planning consultancy that provides its clients with a holistic approach to financial and investment advice.
The PPA team specialise in developing holistic property strategies for first home buyers, investors, upgraders and those transitioning into retirement.