While Australian tends to think property will always be ‘safe as houses’, there are some essential criteria to building a strong property portfolio. Here are the experts’ five key principles to property investment:
1 – Establish the right entry point
Maximise your opportunities by understanding your entry points – that is, how and what kind of property are you going to buy? Seek your advantage through acquisition, whether it’s off the plan purchasing, house and land packages, or mortgagee and distressed sales.
2 – Understand the forecast capital growth for the region
In selecting a promising growth region, pay attention to variables affecting property supply and demand – where there is significant supply and demand inequality, there lies your opportunity for growth. Ensure you research local demographics, government policy and infrastructural change.
3 – Obtain detailed information on the property
This goes without saying, but pay particular attention to details such as aspect, size and proximity to essential services. Also focus on a point of differentiation, which will be a drawcard when you look to sell your investment.
4 – What are the comparable sales of property?
Research local sales as well as an area’s vacancy rates before you decide to invest. Vacancy rates below 2.5 per cent are a good rule of thumb. Also be sure to qualify the market rents in an area to measure up your return on investment.
5 – Ensure your investment has an exit strategy
Your first criteria for purchasing is to find out whether the investment will attract a higher price in the near future. Increases in value shouldn’t be taken for granted. By identifying an exit point, you’re less likely to miss it if (or when) the market starts to decline.
For more information on property investment strategies, check out Silverhall’s range of FREE informative ebooks, or contact them on 1300 662 143.