Forget market hype. Smart property investment means looking much further afield than the convenience or desirability of the area you live in.
by Cam McLellan
If you believed the current property market hype, your property investment strategy might look something like this: wait it out for the market to ‘cool’, or quickly jump in to the buyer feeding frenzy.
Emotional reactions are inherently flawed; they rarely get you ahead. Our emotions drive us to seek confirmation from friends and family, making us want to buy in popular areas so we can seem successful. But here’s the rub, there’s very little room for growth in areas that are already popular — their growth days may be cooling, for now.
A better strategy is to buy in places that may not be as popular but have potential to develop over time. Choose wisely, and you can expect your property value to increase at around 8% a year. Property investment is a pretty safe bet. Smart investors build wealth slowly.
Start by getting your head around the fact that smart property investment means anticipating the areas that are on the cusp of growth. Hot tip: it ain’t always an area with trendy cafes serving almond lattes!
1. Watch multiple markets
Property markets don’t fall and rise simultaneously. They act independently and in accordance with market trends. Remember: when one market is cooling, another could be getting hot.
Don’t fall into the trap of thinking that the entire market is not performing just because the city you live in isn’t performing well. Quite often incredible growth opportunities exist in markets you might’ve once overlooked.
Know what a healthy market looks like. Smart property investment is all about knowing what clues to look for: fast selling title stock, media interest, good local economy, reduced developer and Government incentives, rising rental prices,and multiple offers flowing in on properties.
2. Leverage median prices
The median house price in one city may allow you to buy in another city with a lower median price and make a profit. For example, right now in Sydney, you could sell for $1million+ and buy in Brisbane — a market that’s delivering strong capital growth — for around $500k. Now I’m not looking to move cities but as a smart investor, I know that I can access the equity in my primary place of residence and use that to purchase an investment property.
In 2015, I made a great deal on a purchase in north Brisbane, with really strong rental yields. The property was cash flow positive from day one. I always say: if it grows in value and pays for itself, then it’s the best of both worlds!
Don’t discount house and land packages. You can usually snap these up at a low fixed price, paying for the block itself before the house goes up, which means you pay stamp duty on the land value, not on the improved capital value.
3. Use a proven process
Ignore the hype. Be picky with who you listen to. Take a balanced approach and arm yourself with market information to fact check what you hear.
Know that your first property is always the hardest. The aim of the game is to make a smart decision on your first investment property, which you can then leverage to build an investment property portfolio.
While there is no guarantee your property will gain in value over any given period, and capital growth depends on using the Market, Area & Property (MAP) process, historically property markets experience steady growth over the long term, typically doubling every 10 years.
Start your property investment journey today.
Talk to a trusted property investment expert before kicking-off any property investment strategy. There’s a lot to consider, and OpenCorp can help.
Contact us today or watch our video on how to select a property using the Market, Area & Property (M.A.P) process.