Propertyology’s Simon Pressley answers one of the most common property buying questions: Should investors purchase properties they would want to live in?
For some aspiring investors, it could be easy to get attracted to properties that they see themselves living in as owner-occupiers, but experts remind them that there is a stark difference between buying a home and buying an investment property.
While buying a home is all about liveability and the overall comfort of its would-be occupants, buying an investment property is all about maximising returns.
According to Mr Pressley: “Your own emotions are important for where you live because it’s important that you feel okay living in it – from the city or town down to the street and the house itself – but emotions have got nothing to do with investing… If the property investor is not conscious of that, they could be eliminating potential locations based solely on emotion.”
“There are 50 regional locations where property prices have trebled, and probably 99 per cent of property investors have never given the time of day to any of those locations because they live in a capital city, so they just think, ‘I’ve got to buy a property here in my hometown’.
“Or, if they realise that it’s not a good time to buy in that capital city, they think, ‘The next best thing is 200 kilometres away… or I’ll go to the next capital city’. But that’s not research. Whether you would live there or not is irrelevant. It’s not the objective.”
The buyer’s agent reminded investors that buying a property for wealth-creation is ultimately a financial decision, not a sentimental nor personal one.
Often, when researching the property market to make a purchasing decision, investors come across seemingly innocent words that could actually signal the beginning of an emotional thought process, according to Mr Pressley.
Across the property market, investors may hear advertisements for “high-quality properties in high-quality areas”.
While seeking a high-quality product is reasonable, Mr Pressley reminded investors that the definition of high quality may differ from one market to another.
At the end of the day, the quality of the investment property can be determined by the growth fundamentals that it offers.
“If this is a financial decision, quality is about information. Focus on the information and fundamentals and not on the product, and in this instance, the property is the product,” the buyer’s agent said.
As in assessing the quality of a property for investment, Mr Pressley strongly encouraged investors to avoid relying on their eyes when searching for an asset.
“‘Looking’ is another keyword that signals an emotional thought process. The brain is the organ that does the thinking, so property investors should rely on that. The eyes, wrong organ,” he reiterated.
As a buyer’s agent, Mr Pressley rarely ever looks into a potential investment area without doing thorough research and due diligence first.
When it’s time to visit the location, he drives down the streets, visits the local council and meets with key stakeholders to get a holistic understanding of the property and its location.
After all, property investors are not only investing in one property, but more importantly, in the city where the property is built.
According to him: “All the really important research is done from our office. When we go to the location, which is before we start buying, and that’s when we drive down every street, meet with council and the chambers of commerce and key employees.”
“We’re doing that to work out exactly which street would we consider buying properties in. That requires a local level investigation, and it’s a combination of what we see in that city now and an understanding of how that city’s going to change over time. That’s why we meet with the key decision-makers.”
While the parameters that he use changes depending on the investor’s goals and strategies as well as the chosen location for the property investment, Mr Pressley has two simple non-negotiables for purchasing a real estate asset.
“Every time, it just has to be structurally sound and low-maintenance,” the buyer’s agent concluded.