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Have you decided to take the property investment journey but are feeling clueless as to how to actually board the train? We\u2019re going to give you our top five tips for buying an investment property in 2022 to help point you in the right direction!<\/p>\n
But first\u2026<\/p>\n
We know there are a few different market drivers that impact investment properties, such as economics, supply and demand, and rental yields – but the one we want to focus on today that is particularly influential is infrastructure growth.<\/p>\n
Investment in infrastructure stands out because it reveals where money is spent, where jobs are getting created and of course where property values will likely increase.\u00a0<\/p>\n
If you\u2019re trying to determine if the property you have your eye on will be a success, ask yourself these four questions:<\/p>\n
<\/span><\/p>\n 1. What is the current investing climate?<\/span><\/strong><\/p>\n What does the market look like? Are local investors buying in the area and how long is it taking for properties to sell?<\/p>\n <\/span><\/p>\n 2. Are incomes increasing?<\/span><\/strong><\/p>\n Look for the percentages of individuals who are in high paying growth industries such as medical or tech – then look at property prices.\u00a0<\/p>\n Can their salaries support the rents as they are now? Could they afford them after any increases?<\/p>\n <\/span><\/p>\n 3. Could a ripple effect take place?<\/span><\/strong><\/p>\n Are nearby suburbs undergoing change that is influencing \u2013 or soon will be influencing \u2013 the suburb you\u2019re looking at?<\/p>\n <\/span><\/p>\n 4. What kind of demographic lives in the area?<\/span><\/strong><\/p>\n Age, profession, marital status\u2026all of these demographic factors play a part in what type of properties will do well in a certain area.<\/p>\n Once you know what the demographic is, you can figure out what it is they want such as good schools, or good public transport.<\/p>\n Right, so we\u2019ve already alluded to the significance location has on your success when buying an investment property.<\/p>\n The importance of location is simple \u2013 you can do what you want with your real estate, but you can never change the area it\u2019s in. That\u2019s why we need to be smart about where we invest. Here are three things to consider when looking at markets and locations:<\/p>\n Have you heard of the Four X Growth plan<\/a>? It\u2019s an awesome strategy used by TRC-Gorod CEO<\/a> Sam Saggers, where you aim to choose assets that will go through four types of growth – deal growth, location growth, market growth and behavioural growth.\u00a0<\/p>\n Location growth comes about through gentrification<\/em>. Gentrification is the process of an area’s economics going up as more wealthier people move into the neighbourhood. This stimulates growth as they bring with them new money, subsequently attracting more housing, business and infrastructure.\u00a0<\/p>\n The idea behind it is that wealthy people live where they want to live and they\u2019re willing to pay more for locations that provide proximity, mobility and liveability. So, if you follow the activity of well-off owner-occupiers, you\u2019ll know which areas are valuable for buying an investment property.<\/p>\n Here\u2019s a great explanation on all six stages of gentrification<\/a> and how to spot the process happening early.<\/p>\n <\/span><\/p>\n 2. Look at how behaviours may change in the area<\/span><\/strong><\/p>\n Locations that create positive or desirable behaviours are worth their weight in gold.\u00a0<\/p>\n Planned infrastructure or local projects will tell you exactly how that property may be used differently in the future, whether its new bike paths being put in that connect your real estate to the main shopping centre of that district, or an older apartment building getting a new accessible rooftop space.<\/p>\n Keeping up to date with town planning is a great way to know how councils plan to grow areas and foster certain behaviours.\u00a0<\/p>\n Also doing your research around a city’s economy and how they\u2019re planning to attract a bigger population is key. Sam shares his thoughts on why Brisbane is one of the best places for buying an investment property right now<\/a>.<\/p>\n <\/span><\/p>\n 3. Let go of preconceived ideas on location<\/span><\/strong><\/p>\n Too often quality real estate gets overlooked because investors have preconceived notions about those locations.\u00a0<\/p>\n For instance, people might not bother to look in Sydney anymore because the values have grown tenfold in certain areas – but that doesn\u2019t mean there aren\u2019t any good properties left in Sydney that are within your price range and poised for gentrification.\u00a0<\/p>\n You also don\u2019t want to get the idea in your head that you should only invest in locations near you or that you\u2019re familiar with personally. That\u2019s what your property strategist and coach<\/a> is for! They\u2019ll not only help narrow down your search to a handful of potential locations, they\u2019ll also reach out to local agents in those areas to get a better feel of the rental returns and demographic.\u00a0<\/p>\n 1. Location is everything<\/strong><\/p>\n Come on, if you’ve got this far you already know this! Even when there\u2019s a lack of good supply, don\u2019t let that push you to buying up in the wrong areas.\u00a0<\/p>\n A quality location should have strong rent-to-income ratios where typical tenants have the cash to also cover a rental increase.\u00a0<\/p>\n On top of everything we\u2019ve already mentioned about location, look for neighbourhoods that have more of a live, work, play dynamic. These are areas where everything you need or want (entertainment, food precincts, culture, wellness and natural amenities) can be reached within 20 minutes of your property.<\/p>\n <\/span><\/p>\n 2. You need MULTIPLE strategies to succeed<\/span><\/strong><\/p>\n Buying an investment property is a 15 to 20 year-long commitment, so it\u2019s silly to think that you can make it through without having multiple strategies in place.<\/p>\n That\u2019s right, multiple<\/em> strategies. Seven in fact! You\u2019re going to need:<\/p>\n Of course, it\u2019s not expected that you\u2019ll come up with these all on your own. Strategising is where you need your six star team<\/a> to step in and help – starting with an awesome property coach or mentor<\/a>.<\/p>\n <\/span><\/p>\n 3. Think about the quality of your tenant<\/span><\/strong><\/p>\n Finding the best tenants has always been a concern when buying an investment property, even more so since the pandemic made it very clear just how many renters are one paycheck away from being broke.\u00a0<\/p>\n An ideal tenant should have enough cash to their name that they won\u2019t need rent relief if a major interference happens. This isn\u2019t to say they all need to be in jobs that pay over $80,000 a year, just that they have enough extra cash flow to take on increases with ease.<\/p>\n Considering the lack of wage growth across Australia, this means having your property manager do a little more due diligence to ensure the tenants they choose are reliable, skilled and working within in-demand industries.<\/p>\n <\/span><\/p>\n 4. Invest in the visual experience<\/span><\/strong><\/p>\n There are too many people out there focusing only on analysing markets and crunching the numbers when it comes to buying an investment property.<\/p>\n But guess who doesn\u2019t give two hoots about the data? Renters and home-buyers! What they do care about is the feel and the visual experience a home provides.\u00a0<\/p>\n There are three design traits that your property needs in order to appeal to the top tier demographics:<\/p>\n For a much better deep dive into each design aspect have a read of this blog: The psychology of what makes a home desirable<\/a>.<\/p>\n <\/span><\/p>\n 5. Get rid of any bad debt first<\/span><\/strong><\/p>\n Bad debt is not something you want to have hanging around your neck when it comes time to borrow money.\u00a0<\/p>\n If you currently have credit cards, personal loans, car loans, or any other kind of consumer debt to your name then you\u2019re not helping your financial standing with lenders.\u00a0<\/p>\n Remember this includes your own home – your Personal Place of Residence – which offers no tax benefits unlike buying an investment property which we consider to be good debt<\/a>.\u00a0<\/p>\n To improve your borrowing power, focus on paying down as much bad debt as you can so that you free up that cash flow for more properties. If it\u2019s your own home standing in the way, then it may be worth considering moving out and renting somewhere cheaper for a while.<\/p>\n It\u2019s all well and good for us to share our tried and tested tips for buying an investment property, but without the right guidance to implement them you might find yourself just as stuck as you were before!<\/p>\n The truth is you won\u2019t succeed as a property investor unless you have the right team around you. We run free real estate investing seminars<\/a> designed to help you build strong foundations for your property portfolio – including how to choose the best people to help you.\u00a0<\/p>\n Learn where the best markets are to start your investing journey and begin creating the financially free life you\u2019ve always dreamed of.\u00a0<\/p>\nWHERE TO BUY PROPERTY IN AUSTRALIA<\/h3>\n
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FIVE TIPS FOR BUYING AN INVESTMENT PROPERTY<\/h2>\n
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THE BEST ADVICE YOU\u2019LL EVER GET\u2026<\/h3>\n