When you’re looking for your next property investment, here is a simple but effective approach that will help ensure your success.
Ok, so you have a deposit, (or access to a deposit through some equity in another property) and a loan pre-approval in place. So it is time to start looking for your investment property.
This is where it can start to become a little overwhelming. There is just so much property out there that you can buy!
It is hard to know which properties are going to be great investments, which properties are going to perform just average, and which properties are going to create a massive hole in your pocket!
The first thing you need to remember, is that you are 'investing' and not 'speculating'
Buying a property that may be just around the corner from you in your neighborhood, and looks a great place to live, may or may not have the ability to fully service your loan and other costs. You are then left to make up the difference out of your own pocket, each and every week. I have seen this difference amount to over $200-$300 per week. If you buy the property knowing this, with the hope that it will one day shoot up in value to cover all your losses and put you into profit, then you are merely 'speculating' or 'gambling', not investing !
You are investing very large sums of your money here, a professional approach and attitude is critical to your success.
Buying a property that will cover its costs from day one (such as interest payments and all other expenses) or even put some money back in your pocket each week, is the sort of investment that will help you get ahead straight away. Your Property Investment Advisor should be able to take you through these numbers to take the guesswork out of your potential investment, and show you how this investment will affect your particular circumstances.
Ultimately however, capital growth is what creates you wealth, so the regions you select for cash flow also need to have a high potential for growth.
But how can you predict capital growth?
Well this can be a very in-depth subject, but basically, you need to be confident that there will be an increasing demand for that type of property, in that particular area, in future years.
Population growth and income growth are two strong drivers of capital growth in any particular area.
Some things that can cause these two types of growth are what professional investors are constantly looking for, because they know once they find out this information, population and income growth are sure to follow, and that will generally have an upward effect on property values, and also rent values.
There may be a planned and approved project that will soon be built such as a;
Once the project is complete and operational, it will attract employment growth and business growth in the area. Ideally, you will have a combination of several of these. This will have a knock on effect and stimulate the whole local economy.
People will want to live in close proximity to these places, so you can feel comfortable that there will be constant demand for accommodation in these areas and Capital Growth will follow.
Make sure you ask your Property Investment Advisor what will drive the Capital Growth in the particular area they recommend, to ensure your Property Investment is a success.
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