Creating wealth through Property InvestmentBy Chris Gray | Apr 24, 12 01:19 PM
Tips for securing your first investment property
Taking the plunge and purchasing an investment property may seem a daunting prospect but it's a strategy that, if approached correctly, can make (and continue to make) you money.
As the host of ‘Your Property Empire’ Fridays on Sky News Business Channel I’ve been lucky enough to speak to some of Australia’s best property specialists and researchers and ask them questions about how to make money from property.
With the first quarter of 2012 over, it's time to evaluate whether you are on track to achieving your property investment goals.
Those new to property investing often wonder whether it’s the right time to buy – is the market just about to rise or fall? They sit on the fence and the longer they sit there, the less likely they are to make that decision.
I’ve been investing for 20 years now and the more knowledge I gain, the more I realise that even the professionals can’t time the market. Property investing is a long term game and the aim is to never sell the property, you simply refinance when it rises in value and then use the equity to keep repeating.
Whilst you never want to buy at the peak of a cycle, I always buy when I have the cash to buy, no matter what everyone else is saying. If you buy when everyone is buying, you’ll pay a higher price with the added competition. If you buy when no one else is buying you get cheaper prices, but have more emotional uncertainty with your friends and family questioning you.
Interest rates dropped at the latter half of last year, making property investing slightly more affordable and giving more people confidence that the market might rise. This year has seen more buyers enter the market so things are looking positive for the property market.
Top tips for investing in property in 2012:
Buy blue chip - The best strategy for anyone looking to buy their first investment property is to buy median priced properties in areas where there is always demand. This is generally suburbs 5 – 15 kilometres from a major CBD and near the beach in Sydney or the bay in Melbourne. If you buy a good investment property in these areas you will always be able to attract working professionals which reduces the risk of the property going untenanted. This, in turn, will assure you of good rental returns.
Do your research - To get started, put in some legwork and do your research online and by reading the literature. The expert columns on realestate.com.au provide a variety of opinions on the market, and there are a whole host of other property sites out there. I also answer viewer’s questions each Friday on Your Property Empire (Sky Business News Channel). Another great idea for first timers, or any investor looking to improve their returns, is to get out there and network with other investors. Ask for their recommendations for professionals who can help you achieve the best possible results.
Make use of professionals - You need professional help with your first investment (and, I believe, every investment thereafter) because you are spending large amounts of money. You’ve got to treat this outlay like you would in any other business and pay for expert assistance. Paying professionals to do a lot of the work for you makes sense because they can usually do a better job. Even though people hire me to buy and renovate their portfolios, I still use teams of valuers, building inspectors and strata inspectors so that I know what I’m buying into. This makes property investing a straightforward process rather than something to be intimidated by.
Choose property that’s attractive to tenants - It should be clean, have good-sized bedrooms, off-street parking, and good positioning away from noise and main roads. “You’ve got to buy something that suits the majority of tenants in that particular area. Factors such as these will ensure your property is attractive to renters and will guarantee your income stream.”
If you are ready to enter the investment market, go for it now. It’s a great time to take the leap into the world of property investing.