The No #1 Thing All Smart Investors Do When Buying Property
Being a successful, smart property investor means asking a lot of questions, all the time.
Making a decision about whether or not to buy a property is never just about asking the question, “Is this a good property to buy?”
Compared to what? A three-bedroom house in Sydney, or a one-bedroom studio apartment in Bendigo? What are you comparing it against and how does it measure up?
The art of comparison is a skill you need as a smart investor because the real estate market is an ever-changing, fluid thing.
You have to look at the big picture, never assume you know all the answers and ask a lot of questions to be sure you’re making smart investment choices and decisions.
A good place to start when you’re considering a purchase is what you’re comparing it to.
HOW’S THE PLACE?
An easy comparison to make with property is country vs city.
City dwellings are traditionally more expensive to buy and smaller in square meterage and land.
Regional properties will be cheaper to purchase, with much more space, inside and out. So perhaps you can buy a four or five-bedroom house with a lock-up garage, pool and garden out in the sticks, and you’ll be lucky to find a one-bed apartment close to the city for the same price.
However, you need to consider what you want out of the purchase. City apartments attract higher occupancy and much higher rents, which means if your plan is to increase your cash flow and create passive income, a city apartment will grow your wealth faster.
One of the side-effects of COVID-19 has seen people living, working and socialising close to home, which means they want to be walking distance from everything.
Being stuck out in the middle of nowhere with a big house, but nothing else, now has a very low liveability factor, and so what you get in space, you could lose in tenancy and rent.
HOW’S THE INFRASTRUCTURE?
Properties need some fundamental factors that will help increase the capital value and attract good rent rates. One of these is infrastructure.
Good, well-maintained and often-improved infrastructure – roads, public transport, power facilities etc – doesn’t only make an area more attractive to live in, but it also creates jobs.
Jobs mean income, and income means rent.
While the property you’re looking at might seem like a steal, if it isn’t supported by good local infrastructure, the area won’t develop and grow, meaning fewer people over time will want to live there.
IS IT A PLACE ECONOMY?
Making a decision to purchase a property that is going to stretch you financially means you have to ask, is this property going to continue to grow in value and income?
One of the factors that can help you answer that question is whether or not it’s in a Place Economy.
A Place Economy is an area that is attracting wealthy people, not only to live but to socialise and be seen. Bondi is an example of a classic Place Economy. You can sit on Bondi Beach, eating a Bondi Burger and see a Bondi Rescue lifesaver strolling past. It’s a brand and people want to live there, spend time there and live the lifestyle it is advertising.
So, buying a $3 million mansion in the bush, where no one wants to live and you have to drive an hour for a decent cup of coffee, compared to a three-bedroom apartment in Bondi for the same price?
You’re going to see instant and consistent return on your Bondi investment, even if capital growth plateaus, because of the rents you can charge and how often you can increase them.
START THE COMPARISON
Smart investors ask questions and know how to make the strong comparisons required to buy right.
But, if you’re just starting out, it can be hard to know who to ask. That’s why we’re running a free property investing seminar. Come along and talk to our team of property experts who are all successful investors and know what it takes to build a healthy portfolio.
Sign up for one of our information and education events, where you’ll be equipped with the tools, resources and support to thrive, and not fall behind on your path to financial freedom – whatever that may look like for you.
Book your spot now and find out what you need to know about the current market landscape and how you can make it work for the ultimate wealth creation opportunities.
By Jason Whitton
Group CEO Positive Real Estate
