It is a well-established fact that property investment is one of the most successful and popular wealth creation vehicles in Australia today. Media reports continually demonstrate Australia’s fascination with property by concentrating on the rise in property values over the years and reporting on the latest property hotspots all around Australia.
In fact, the rise in property values matches similar investments in the sharemarket and financial experts advise investors to have a balanced portfolio which always includes property. Of course, it is not as simple as it may first appear. If you do not have a well-designed strategy the returns may not be as spectacular as you would want.
There are many parts of an investment strategy that need to be matched hand in glove in order to ensure a good investment return. Financing, property selection, tax planning and cash flow analysis are just a few of the things that need to be set up before you embark upon acquiring an investment property.
In this article we will concentrate on how to locate a good investment property that is likely to generate an attractive return.
In the first place, it is important to realise that choosing an investment property should not be one based upon emotions for physical attractiveness. A property purchase needs in-depth research before making any decision. Whilst many people are inclined to rely upon anecdotal evidence provided by friends and family, specialist research is the only sure fire way to reveal the best possibilities.
There are some valuable pointers.
- Independent third-party research from trusted sources will be devoid of unnecessary hype and fads that continually plague investors. Just because a media journalist decides to write a story for popular consumption does not mean that financial experts necessarily agree.
- Research should always include an examination of the risks involved coupled with a considered opinion as to the suitability of the location. Investment opportunities may arise in previously ignored areas of Australia particularly in the larger regional towns. For example, it is very possible that a house on a large block of land in Brisbane will have a greater chance of capital appreciation than a unit in many parts of Sydney. An expert financial analysis will reveal these possibilities and provide a sound basis for making an investment decision.
- A property investment strategy should always involve long-term projections. In other words, the longer you hold property the greater chance you have of achieving your financial goals. The other side of this coin is that you will have to spend something on repairs and maintenance and possibly some improvements, that’s why it’s important to plan your cash flow to take care of these contingencies. Without this, the investment strategy could easily fail.
The most important point that can be made is that you need specialist advice from experts in the property field in order to plan a successful strategy. You should approach your property investment with the eye of a professional and not rely on newspaper reports or the latest fads that emerge from time to time. Couple this with independent research and you can minimise your risk and maximize your return.
It is easy to be seduced by stories of get rich quick schemes but the truth is that a long-term well-planned strategy is the only true way of achieving your financial goals.