Investors share the same goal: Make the most of your assets – there are many ways to do it.
When your investment property asked Jeremy Sheppard, co-founder of LocationScore.com.au, how to buy below the market value and get a revalued property at market value, it's immediately opposed to this idea.
"Technically, there is no such thing as" below market value "because the new value of the property is what you just paid," says Sheppard.
"However, theoretically, this can be done. But you will not be able to take advantage of it until a decent number of other similar property sales in the surrounding area take place at fair market value or at a higher price. "
The problem? Other buyers will refer to your purchase price and will attempt to negotiate a lower price for their property accordingly.
Buying below market value can then establish the new price standard in the region and if the trend continues, your unrealized profit will be eroded by continuing tough negotiations by others buyers.
Sheppard instead recommended buying in markets where it is impossible to buy below market value. He encouraged investors to buy in markets where the only way to enter is to pay above the market price. These are markets where demand exceeds supply.
"No seller needs to accept a value below market value in a popular market. Why would an investor want to buy in a cold market? Even if they got a good deal, they would not have growth, "he said.
If most buyers pay above the market value, then we talk about capital growth. If most buyers are able to buy below the market value, then it is called negative growth.
According to Sheppard, every transaction under the market is a boost for capital growth. Investors should avoid markets where it is possible to buy below market value if they want capital growth.
To increase the profits of a property you currently own, Sheppard revealed his three main strategies:
1. Cost Reduction
Shop for better mortgage rates, insurance and property management fees. Be careful not to sacrifice too much functionality / service.
S & # 39; self-management. Not recommended, but not extremely difficult either.
Self-sustaining. Again, this is not advisable, especially when building standards need to be met.
2. Increase the rent
Ask your Real Estate Administrator if this is possible given current lease and market conditions.
Add some small features or benefits that the tenant is willing to pay for, for example. a garden shed, allowing pets, etc.
Rent per room. Can be a nuisance due to the higher turnover of tenants.
Rent fully or partially furnished.
Short term rental. Not recommended and not effective in many places. The holiday resorts are ideal.
3. Increase the value
Add a grandma apartment (this also increases the rent)
Renovate bathroom, kitchen, etc.
Extend deck, extra room, extra floor, carport, etc.
Do you have more than $ 200,000 in your super fund? You Can Use Your Super To Buy A Property – Find Out How
Top suburbs:
Hebersham
,
Dulwich Hill
,
Bligh Park
,
crossing of ropes
,
Goworthville
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