Fact: In a city like Sydney, downtown homes will almost always be a good investment.
"All major Australian cities have a circle of heritage properties within a 15-km radius, which have always experienced strong capital growth," said John Kovacs, general manager of the Mortgage and Mortgage Creditors portal NMDData.
But properties like this are not always expensive. In the port city, these types of dwellings will have a seven digit sales price – and rental income can only cover half of the mortgage repayments.
So, how do you look for affordable and quality real estate opportunities to advance in the real estate game? As cliché as it sounds, everything starts with the location. You may not be able to afford the city center, but there are pockets searched in every suburb.
"We have all heard it in a commercial sense, but the location, the location, are essential. The property must be well located, close to schools, shops, transportation and recreational facilities, "says Kovacs.
"Quiet, green suburbs, or houses with ocean views and near parks and gardens, are the perfect setting."
He also recommends that investors look for growth corridors, areas where the government spends money on infrastructure, roads, schools, and public transit.
"The correlation between new infrastructure and real estate prices is a proven method and allows steady capital growth," he says.
"Also, do not be afraid to look outside your state to invest in the property. It's a great way to diversify your investment portfolio and keep you abreast of market trends and real estate cycles across the country. "
"The correlation between new infrastructure and real estate prices is a proven method and allows a steady growth of capital"
Look back to look forward
It's very good to know the types of properties to look for. But with literally thousands of suburbs to choose from in Australia, where should investors even start?
This is where you really need to focus on the numbers.
Let's start with the overview: where are all major cities in terms of market cycle? CoreLogic publishes national figures updated daily, which makes it an excellent starting point.
In the current market, investments are down. The president of the Real Estate Institute of Australia, Malcolm Gunning, confirmed that the value of housing investment commitments "is at its lowest level since July 2013, while the prices were much lower. "
"The continuing decline in housing finance reflects the slowdown in the market; APRA restrictions, which in hindsight were probably excessive; the impact of the royal commission on banks; and concerns about changes to property taxation and its impact in the event of a change of government. "
These threats and worries are pushing many investors to put their investment plans on hold, but Jane Slack-Smith of Your Property Success believes that it is now time to "seize the opportunities". buy at a price below market value and keep it. "
"While two of the biggest markets are struggling, investors still have many exciting opportunities," says Slack-Smith.
"There are even markets in Sydney and Melbourne that are still growing, so do not think there is a market for a state or even a city. There are markets in the markets. And remember, these periods of slow, stagnant growth come and go; it's how the property cycle works. If you invest for the long term, these short-term corrections should not affect you. "
Assuming you have confidence in your decision to achieve your real estate goals, you should have already chosen a short list of potential investment sites.
Kovacs suggests that once you have chosen the main city in which you want to invest – for example, you have selected Brisbane or Hobart – then you have to look for the price evolution of the city. real estate and rental yields in every suburb or city of interest. in the last three to five years. You can do it for free on the Internet through data providers such as CoreLogic or Residex. "This will give you a good indication of growth patterns and an idea of ​​the cost comparisons of goods sold in the area of ​​interest. Local agents can also give you information on rental yields and vacancy rates, including the types of properties sought for rental investment, Kovacs said.
"In addition, despite their sensitive and somewhat controversial nature, mortgages and mortgages may be worthwhile. These assets are a real value in the increasingly difficult real estate market, and can be purchased at a price below market value. When buying a mortgage creditor or a deceased property, a careful analysis is needed to determine its value. The supply, demand and location must be carefully considered. "
Addition of value
To be successful when buying a premium property, you must have a clear plan for the property. That's why developing a strategy is so vital to the profitability of your bottom line.
Some investors prefer to start managing a property. They invest in an asset and let a property manager manage the ins and outs of managing the house on a daily basis. It's a strategy of "fix and forget".
Other investors choose to be more active, opting for making stocks by investing in properties for which they can add value.
To carry out a renovation strategy, the property must have the potential to generate added value through renovations.
"It should ideally have a kitchen, a bathroom and a clean and neat laundry, as these are the most expensive areas to renovate," says Kovacs.
"If you are thinking of building a" renovator "style, be very careful not to overcapitalize your renovations. A manor house decorated in an industrial place is doomed to failure. Prudent research is the key. "
Slack-Smith agrees. "Overcapitalization is a common problem in real estate investing. Going to the sea with a property may not work if its location limits its value, "she says. "Your goal is to respect this golden rule: you must earn $ 2 for every dollar spent on renovations."
Of course, a successful investment does not end when you own your property and own it. If this is the case, this is where your trip really begins, because many financial and tax tasks will then be added to your to-do list.
"Ask a property manager to filter and locate a tenant," says Kovacs.
"It's certainly money well spent. A property manager will prepare rental documents, arrange bonding, collect rent, conduct regular inspections, and arrange for necessary repairs to the property. In addition, these fees and expenses are fully deductible from rental income. "
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