A Sound Investment Strategy

Purchasing a property as an investment can offer many bonuses.

But like all investments, it's important to develop a strategy to suit your needs. Here we list some important themes to consider.

Many people like investing in property as it is something solid – bricks and mortar. Unlike shares or other paper investments, a property investment is physical – so you can see it, touch it…and renovate it!

Property is often seen as a lower risk option compared with the stock market. Fluctuations in the property market are not normally as frequent, dramatic or volatile as the stock market. Whilst a company can go bust and shares become worthless, this is very unlikely to happen with property.

Changing Trends

The increased capital growth seen in major capital cities has prompted new motivations for investing in property. Many people are using investing to get a foothold in desirable property markets while continuing to rent elsewhere.

Some people take on investment properties for personal use later in life, such as a holiday or retirement home.

Simple Solutions

Earning power may be increased by getting a property, renovating it then renting it out for a higher rate. Simple measures like new paint or a refreshed bathroom may deliver a greater rental income at a relatively low cost.

You could also consider investing in property as part of a family trust or investing with friends or family. But always choose a property investment strategy that suits your individual needs.

What to Look for

An ideal rental investment property may feature easy access to transport, shops and other amenities. Many young families rent so you may want to consider a property close to schools and day care centres. And don’t forget students – rental properties near universities are always in high demand.

While units and houses offer different advantages, always consider which would make a better rental property in the area.

Remember, regardless of other features, a great bathroom and kitchen make for a good investment property, and pools or large yards can be costly to maintain long term.

New Versus Existing

A new unit as an investment can offer the advantage of depreciation, but the flipside is that you won’t know its potential in the rental market.

If development slows, new properties may become scarce, so the demand for existing properties increases.

Remember, a lot of existing property has wide-ranging design appeal over new trend-setting properties increasing rental desirability.

But, whether new or old, always do your homework regarding any potential changes to the area, such as re-zoning, new roads and having views or access impeded by new buildings.

Overcapitalising

Just because you have improved your property, don’t assume the money spent equates to the same value come sale time.

Turning the worst house in the street into the best may not always guarantee an increased return on your investment.

Research

One of the best elements of a property investment strategy is research. The internet can provide a wealth of information. Look at property portals and estate agent web sites.

For more detailed comparative pricing data there are several property data providers that can provide past sales prices for a particular property or a complete postcode report.

For more details on an area look at the local council website, plus “google” the suburb name.