How to avoid being shot in the back with your new investment property
Property investing is a fantastic way of setting yourself up for the future. Your income can be made self-sufficient and managing your properties can be much more exciting than sitting behind an office desk from nine to five every day.
Want to take that step and be in control of your financial future? Turn the first page of your property portfolio by buying your first investment property. Don't get stuck in the mud though, you'll need to make sure you aren't getting trapped in a situation that is likely to cost you more money than the real estate is worth, so take the advice of a buyer's agent and protect your purchases.
Get behind the wheel
Cities all around Australia are becoming more and more accessible for investors, as the Real Estate Institute of Australia (REIA) has recently noted a decrease in the national median house price.
"The weighted average, capital city median price decreased by 0.4 per cent to $695,788 for houses and 0.7 per cent to $543,468 for other dwellings," said REIA President Neville Sanders about the 2015 December quarter in a March 10 media release.
"Strong growth in Hobart, Canberra and Brisbane, followed by marginal increases in Darwin and Perth, were unable to offset falling median house prices in Sydney and Melbourne, while Adelaide recorded no change over the quarter."
The increases and decreases in median price for each separate city do not necessarily point to one over another as the best place to invest. For example, BIS Shrapnel's Australian Housing Outlook 2015-18 report finds that the median house price in Brisbane is $511,300 which has increased by 10 per cent over the past two years. That increase might appear small compared to Sydney's 44 per cent and Melbourne's 28 per cent, but there are other factors at play in the Sunshine State.
The 2018 Commonwealth Games are fast approaching, and the Gold Coast is going to be the first ever regional city in Australia to host the major sporting event. That means a large amount of infrastructure and stadium development is occurring, providing a particular boost to the region. A separate BIS Shrapnel report has noted a decrease in the number of new housing constructions on the Gold Coast of late, and that is meaning undersupply of dwellings. High demand means people will be looking for any rental opportunity, and in a situation like that it can be very beneficial to already have an investment set up to be rented out.
Brisbane will see benefits from the south on the back of developments on the Gold Coast and the city may experience a similar situation occurring with undersupply a risk in the coming years.
Where will your advice come from?
There is help available, and missing out on the opportunity to build a solid retirement fund would be a real shame.
Taking into account all of the aspects of a region and how it will increase in value over time is a significant part of making a good call on an investment property. But the amount of data you could find yourself searching through is endless, and it could put you off investing altogether. But don't be discouraged! There is help available, and missing out on the opportunity to build a solid retirement fund would be a real shame.
A property agent from Cohen Handler will help you to sift through the information and make the right choices. For a start, they will know the optimal suburbs in a city to invest in based on how they are growing and how demand in neighbouring regions will improve the value of property there. For example, Box Hill in Melbourne is undergoing extreme periods of growth over the coming years, and while it might be expensive to buy into right now, the potential for capital gains is enormous. Smart Property Investment lists the median house price at $1,450,000, and the projected growth in the suburb over the next five years is 72.62 per cent.
While it seems like a lot to pay for a property that could be used solely as a rental, it is worth keeping in mind the importance of buying the worst house on the best street over the best house on the worst street. After all, the street takes a lot more work to improve than a house does.
The cheapest street by median house value in Box Hill, according to Residex data, is Clisby Street, which shows a median house price of $973,245 – a significantly more affordable option. On the other hand, however, Archibald Street comes in at $2,436,325, and while that may be out of your price range, as a median value, half of the properties on the street will lie south of that amount.
A buyer's agent in Melbourne will already have considered all of these things and more before you have even approached them. That means a significant weight off your shoulders, allowing you the chance to spend more time with your family and choosing a house that you see holding real potential. In keeping with the advice from your trusty buyer's agent of course!
Get in touch with Cohen Handler today. Your next property investment (or your first) could be just around the corner.