Good investment properties go up steadily in value and provide a good rental income along the way. Being able to identify them quickly is a very useful investment skill. A property investor explains how to do it.
A little under 20 years ago property investor, buyer’s agent and director at Right Property Group, Victor Kumar, came to Australia with just $4,500 in his pocket.
Since then, from humble beginnings investing in Sydney’s south-west, he has built a substantial property portfolio.
Much of Mr Kumar’s success has come down to being able to identify good investment opportunities quickly, a skill he learned early on.
Doing so, he told The Smart Property Investment Show podcast, comes down to three basic fundamentals.
1. Regional areas
Stay away from regional areas, mining towns or areas that have only one economical driver.
2. CBD proximity
Limit yourself to one hour’s travel distance to the CBD, as it is the employment hub.
But you have to properly understand the CBD. It is defined in two levels. The CBD proper, which is your post code 2000 (Sydney), 3000 (Melbourne), and so forth, and invest within an hour’s car travel radius from there.
And then within that look at sub CBDs – like Liverpool, Campbelltown, Parramatta in Sydney, and invest within 10 minutes radius of these CBDs.
3. Old for new
Look at what brand-new properties are selling for in that area, and then within a one-kilometre radius buy an older comparable property, with a price differential of at least $100,000 between old and new.
When Mr Kumar started out he concentrated on buying in Campbelltown and Liverpool in Sydney’s south-west. He was attracted to that belt because the majority of properties there were well priced, there was a demand for them from renters, and you could pick them up reasonably cheaply.
Listen to Victor Kumar's full story on The Smart Property Investment Show:
Episode 14: How I turned $4,500 into a multimillion-dollar portfolio
Episode 19: ‘How I built a multimillion-dollar portfolio even though I bought the wrong properties’