When you’re investing your money for long-term gain it’s natural to want to get the most “bang” for your “buck”. Historically, if looked at over a 10 to 15 year time frame, investing in property has been a safe and stable way to build wealth. However not all property investments are equal, and without the proper research and assistance from experts many investors have found themselves buying properties that only seem to drain their resources and become a cause of stress and complications. With this in mind, we look at some of the smart ways you can maximise the returns from your investment property, keeping you safely on the path of wealth creation.
Buying The Right Property
One of the keys to successfully investing in property is to buy the right property. This may sound obvious, but you’d be surprised how many first time investors actually end up buying a property that either places great strain on their finances or does not fit with their long-term strategic plan. You can find many horror stories online of investors who “fell in love” with a property, only to find that it needed costly ongoing repairs (for example, new roofs, underpinning or major ground works), or they find that it is difficult to rent out for one reason or another.
It is fair to say that the major strategic outcome for the majority investors is two-fold: rental returns and capital growth. Property investment experts suggest that the best way to fulfil these goals is to find a median-priced dwelling or new, off the plan development in an urban setting near good facilities such as transport, schools and shopping. This is because they know that these properties are the most likely to offer stable rental returns as well as capital growth over the long-term.
With a little homework and expert help, off the plan developments can fulfil a property investor’s long-term goals. Because they are brand new and unlikely to require expensive repairs or high maintenance bills, investors (and especially first time investors) buying off the plan can avoid some of the pitfalls that come with existing real estate. Brand new developments also tend to attract a higher rental income, especially if they are situated in and around major amenities and close to the CBD. High value tenants are also more likely to want to live in the latest architecturally designed and attractive buildings.
Diversify Your Portfolio
Another way for investors to maximise their returns on buying a property investment is to consider buying a property in another capital city, rather than just looking locally for opportunities. Especially if you’re following a 10 year strategic plan, the best way to “cushion” yourself from fluctuations in the local market is to diversify your investments into other markets – for example, if you buy a property in Sydney, consider purchasing another property in Melbourne or Brisbane, as the markets in these cities tend to ebb and flow depending on local conditions, but still produce good returns over the long term.
If you do plan to follow this strategy then remember that it is difficult to become an expert in property markets other than your own local market. While you can use online research tools to research data such as prices and rental returns[i], there is no substitute for on the ground knowledge and experience.
The best idea is to find a property investment company such as Ironfish that has expert investment and research teams in the major capital cities who can provide assistance with choosing the best areas to invest in and help you to purchase the right property at the right price.
[i] Tools include RPData, Pricefinder.com, Domain and Realestate.com.au