Looking at Property Investment?
As a golden rule with property investment, to get the most out of your investment you need to be committed for a few property cycles, not just a few years.
A well known historical statistic that in Australia residential property usually doubles every 7-10 years.
However, this doesn't necessarily mean it will consistently grow 10% every year - there may be years of 20% growth or 5% growth but it should all average out in the end when you look at it long term.
By starting off selecting the location of your investment well, you will have a better chance of securing a property with a good track record and give you that long term desired growth.
There are a few ways to choose a good investment property that are basic and there are some golden rules that I would like to suggest will help you move in the right direction - 6 Golden Rules of property selection: 1.
The land area should ideally be greater than 40% of the whole property price combined.
Above 70% and you have a winner.
2.
Market purchase/asking value should be at or around the median price in the area, and shouldn't go over more than 50% of the median price; 3.
The area should have at least increased in value with consistency by 3-4 times in the last 15 years.
Real estate agents would have historical prices of the area.
4.
Try to avoid luxury and specialized properties; avoid extremely low yield (rental return) properties.
5.
Look for high demand properties in well established areas, and try to avoid mortgage sensitive areas.
( your mortgage broker can help in this area) 6.
Try to look for properties you can add value too quickly to create quality equity.
(the ugly ducklings in the street that need some cosmetic renovations) The most crucial part of your investment strategy is your risk management strategy.
Working with a comprehensive risk management strategy that you thoroughly understand will help you sleep better at night knowing your entry and exist strategy bases are covered.
Cash flow management and the future equity built in your investment security need to be utilized effectively as this allows you to cope in times of interest rate uncertainty.
I still believe in the long term property investment and holding the properties for as long as possible to ensure the best result for future wealth creation.
With residential properties on average annual growth rate of anywhere between 5%-10% pa (meaning property prices should effectively double every 7-10 years) is what I would keep in the back of my mind to get you through the good times and the bad times both personally and as a future property investor.
A well known historical statistic that in Australia residential property usually doubles every 7-10 years.
However, this doesn't necessarily mean it will consistently grow 10% every year - there may be years of 20% growth or 5% growth but it should all average out in the end when you look at it long term.
By starting off selecting the location of your investment well, you will have a better chance of securing a property with a good track record and give you that long term desired growth.
There are a few ways to choose a good investment property that are basic and there are some golden rules that I would like to suggest will help you move in the right direction - 6 Golden Rules of property selection: 1.
The land area should ideally be greater than 40% of the whole property price combined.
Above 70% and you have a winner.
2.
Market purchase/asking value should be at or around the median price in the area, and shouldn't go over more than 50% of the median price; 3.
The area should have at least increased in value with consistency by 3-4 times in the last 15 years.
Real estate agents would have historical prices of the area.
4.
Try to avoid luxury and specialized properties; avoid extremely low yield (rental return) properties.
5.
Look for high demand properties in well established areas, and try to avoid mortgage sensitive areas.
( your mortgage broker can help in this area) 6.
Try to look for properties you can add value too quickly to create quality equity.
(the ugly ducklings in the street that need some cosmetic renovations) The most crucial part of your investment strategy is your risk management strategy.
Working with a comprehensive risk management strategy that you thoroughly understand will help you sleep better at night knowing your entry and exist strategy bases are covered.
Cash flow management and the future equity built in your investment security need to be utilized effectively as this allows you to cope in times of interest rate uncertainty.
I still believe in the long term property investment and holding the properties for as long as possible to ensure the best result for future wealth creation.
With residential properties on average annual growth rate of anywhere between 5%-10% pa (meaning property prices should effectively double every 7-10 years) is what I would keep in the back of my mind to get you through the good times and the bad times both personally and as a future property investor.
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