Tips for buy­ing in­vest­ment prop­er­ties

Monthly Chronicle - - Real Estate - CHRIS HOP­KINS, RAINE AND HORNE HORNSBY

A com­mon ques­tion I get asked by in­vestors all the time is: “How do I recog­nise a good in­vest­ment prop­erty?” Here’s my 9 point check­list to help you.

Re­li­able in­come - the prop­erty should pro­duce enough in­come to cover your ex­penses and loan re­pay­ments and not leave you too much out of pocket each month. Your ex­penses in­clude coun­cil rates, wa­ter rates, strata levies, in­sur­ance pre­mi­ums, re­pairs and main­te­nance, and agent man­age­ment fees. Also, keep a lit­tle bit ex­tra up your sleeve just in case some­thing goes wrong. His­tory of strong cap­i­tal growth - check that the area has a proven track record of cap­i­tal growth over time.

Low va­cancy rate - you need to have plenty of ten­ants want­ing to rent your prop­erty. Be­ing lo­cated near pub­lic trans­port, shop­ping cen­tres, med­i­cal ser­vices and schools are im­por­tant fac­tors. High de­mand prop­erty - it should be a prop­erty that will be easy to sell. This en­sures you can get out quickly if you need money to take ad­van­tage of other op­por­tu­ni­ties. Again, lo­ca­tion is im­por­tant. Priced at or be­low mar­ket value - re­search re­cent sales to en­sure you’re not pay­ing above mar­ket price. There’s plenty of in­for­ma­tion avail­able on­line and through real es­tate agents to as­sist you. Keep a close eye on the mar­ket be­fore you buy. Build­ing and pest in­spec­tions - make sure there are no ma­jor de­fects that will af­fect its value or add to your ex­penses un­nec­es­sar­ily. Easy to man­age - prop­er­ties that are high main­te­nance are go­ing to be a drain on your time, en­ergy and fi­nances. Sig­nif­i­cant land com­po­nent - prop­er­ties with a high land com­po­nent are more likely to grow in value. Re­mem­ber that while build­ings de­pre­ci­ate in value, land grows in value. De­vel­op­ment po­ten­tial - prop­er­ties where there is po­ten­tial to add value with im­prove­ments or ren­o­va­tions of­fer in­vestors op­por­tu­ni­ties to grow their in­come and cap­i­tal.

Chris Hop­kins is Prin­ci­pal and Li­censee at Raine & Horne Hornsby. He has over 20 years’ ex­pe­ri­ence in sales, sales man­age­ment, and sales train­ing to ma­jor fran­chise net­works. He now runs a dy­namic team serv­ing the lo­cal com­mu­nity. Formed in 1883, Raine & Horne is one of the old­est pri­vately owned com­pa­nies in the South­ern Hemi­sphere and is cur­rently in its fourth gen­er­a­tion of fam­ily own­er­ship. Chris and Susie Hop­kins have owned the Hornsby fran­chise since 2016.

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