How to Choose the Perfect Investment
Hi guys, had a question: “How do you choose the perfect investment property?”
It’s a really good question. Most people focus on the building itself, but actually, you’re way off the mark.
The perfect investment property is actually the perfect location. Now, when I say “the perfect location”, I’m not talking about the proximity to public transport or anything like that. Come back out further from that.
I’m talking about… are you in the right state? Are you in the right region? Are you in the right town? Every town is a different property market. There’s no such thing as the Australian property market when it comes to decisions.
There’s the Darwin market, the Townsville market, the Sydney market, the Wollongong market, the Newcastle market. And a property market is defined as one commutable distance from the employment centre. So, wherever the commercial employment centre is, wherever people can live to work there, that’s a market in itself.
So, Newcastle and Sydney are completely different property markets, for example. The Gold Coast and Brisbane are different markets, for example.
Then we want to look at that market and we actually want to see what’s going on there. If one house is going up in value, they all are, because it’s the capital growth that’s lifting it.
So, what factors drive capital growth? Well, it’s really simple: supply and demand.
So what factors go into supply? Well factors that go into supply is the land – available residential land to build on. And also, the availability of materials and labour to build those properties.
And from a demand perspective, there’s people who want to buy houses. Now, who are the people who want to buy houses? People with jobs. People with jobs buy houses. Unemployed people can’t. So, where there’s job creation, infrastructure building, there you will find a property boom.
So, at Integrity, we have a research department that does a lot of time working out where these areas are. Because we know that if we’re going to call ourselves a property investment company, we need to be finding these areas and putting people into them so they can make some money.
So, we put a lot of effort into doing that. And it’s actually quite an involved process. Yet, everyday heaps of investors go out on the weekend and they just buy any old thing without any research. What they don’t realise is that they’re potentially doing themselves out of a lot of money, because your big money will be in capital growth. As I said, if one house goes up, they’re all going up. So, you need to make sure you’re in the right market. That’s how you pick the perfect investment property. Pick the right market.
And then from there, you just want to go and get yourself a brand new house in that area. A brand new house. Houses are far better than apartments and townhouses and have better cashflow and depreciation. You have full control over them. No fighting with body corporates. You can renovate them, knock them over, do whatever you want over time. And they have a higher land component. And it’s the land that goes up in value, not the structure itself. When you buy apartments you tend to get locked in with the body corporate. The body corporate rate goes up, the apartment value goes down. And you’ve got a very, very tiny land component in there, so you don’t make as much money in capital growth.
So, the perfect property is in the perfect market, and it’s a house. And it’s a brand new house with a warranty, structural guarantee, heaps of depreciation, low maintenance, and good tenants.
If you want that, just get in touch with us. We do that every day. Get clients into great, wonderful investment properties.
visit our website: http://www.integritypropertyinvestment.com.au/