5 Golden Tips for Successful Property Investing
Property investing can provide a means to achieve your long-term financial goals - but investing involves more than just acquiring an asset and expecting returns to follow. Not every investment will be successful but following these tips can help you make informed decisions with the potential for great returns.
Mar 10, 2022
1. Take a long-term view on investing
We all invest for different reasons, but most do so as a means to achieving financial security.
Based on long term property trends, the fastest way to grow wealth is by acquiring high growth assets and holding them long-term. The costs of frequently rotating investments (stamp duties, agent fees, taxes) can often slow down wealth creation in the investment process.
Successful investment is based more on the strength of the property, than simply owning it. Not every asset is guaranteed growth over time. Think about your long-term strategy before you commit.
2. Focus on the features of the property
When assessing a property, it’s best to consider the following:
- Is this a desirable location that will grow and improve in the future? Proximity to transport, amenities, shops, parks, or beaches are always increasingly in demand.
- Is the home well-built? Brick homes are usually more desirable because of their durability.
- Is there potential for value-add improvements? Simple things like introducing a wall to create a new bedroom, or general renovations are quick ways to boost value and get greater return on your investment.
3. Consider the land to asset ratio
In terms of growth, typically, an older home on a bigger block of land will outperform a brand-new build on a smaller block. This is because brand new apartments or homes generally have fewer opportunities to add value and have more potential to depreciate over time. Additionally, land value increases with time as it becomes scarcer – although there are exceptions to this, such as in outer city areas where land is abundant whilst demand is limited.
4. Flexibility is important
When looking for a property that will perform well in the long run, it’s important to stay open-minded. Restricting yourself only to homes that have a pool, or sit within a certain street of a suburb will likely leave you missing out on good buying opportunities elsewhere. It’s important to remain open-minded and seek good buying opportunities by exploring broader areas and moving on properties that are competitively priced.
However, you might place less focus on this if you’re looking for a home and prefer certain lifestyle features over investment strength.
5. Do your research
Investing comes with risk - but adequate research can help minimise this.
Avoid purchasing based on emotion, speculation or trying to time your buy. Research the areas you’re interested in; study the demographic, price trends and market demand. Is the area likely to become increasingly affluent or is there any new infrastructure investments planned in the coming years?
Once you’ve found your desired location and a well-priced property with potential for growth, you can get creative with value-adding improvements and sit back as your investment grows.
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