With so many variables to look out for, investors can be overwhelmed when determining whether a property is right to invest into. One investor shares his insights on what he looks for.
Trying to determine whether a property is worth investing in or not is a difficult task, as any investor can tell you, but investor Kevin Sum believes he has a process to help him determine whether investing into a property is worth it or not.
Sharing his insights on The Smart Property Investment Show podcast, investor Kevin Sum shares his checklist on what he looks out for when looking for property to invest into in a capital city.
“Let's talk about Brisbane because it's a capital city which I had no idea about. I look at relative value, so I start off in suburbs near the city, then go further out,” Mr Sum said.
Looking into these suburbs, Mr Sum then researches on why one suburb may be cheaper than another.
“For example, Springfield and Redbank Plains, it's just like five, 10 minutes’ drive. Why is Redbank Plains much cheaper than Springfield? Yes, Springfield has a lot of infrastructure, but when you're talking about a 10 minutes’ drive, it doesn't really matter,” he said.
“I just look for relative value.”
After determining a suburb, Mr Sum then looks for houses located within the suburb and tries to determine why cheaper houses are priced the way they are.
“Is it just because it's run down? If it's run down, you can fix it up. Or is it because of small land? Small land, then forget about it because you can't increase the land size,” Mr Sum said
Another “forget about it” is if the property is close to easements, described by Mr Sum as “if there are some restrictions to doing anything to the property”.
Examples Mr Sum gives include sewer and rain water drains, gas pipes and restrictions on height.
In order to avoid these easements, Mr Sum recommends going to the council website of the area investors plan to invest in to find out.
“Just go to the council website, property enquiry, and it will tell you if there's any restrictions on that property,” he said.