Shore up your in­vest­ment

Re­gional ar­eas can of­fer af­ford­abil­ity and bet­ter fu­ture prospects for your port­fo­lio

Sold On Sunshine Coast - - Market Review - By CAS­SAN­DRA CHARLESWORTH

WANT to buy an in­vest­ment prop­erty but not sure where to start? Stop view­ing it as bricks and mor­tar and start think­ing in cold hard fi­nan­cial terms.

That’s the key tip from buy­ers’ agent and Prop­er­ty­ol­ogy man­ag­ing di­rec­tor Si­mon Press­ley.

Mr Press­ley said the crit­i­cal mis­take many would-be in­vestors made was fail­ing to dis­tin­guish the pur­pose of what they were try­ing to achieve.

“In­vestors need to look at the Aus­tralian prop­erty mar­ket as the equiv­a­lent of the stock ex­change and think like a share in­vestor rather than a prop­erty buyer,” he said.

“That means they need to un­der­stand what in­flu­ences prices, and what’s likely to of­fer a good re­turn.” Fea­tures ver­sus ben­e­fits and driv­ers Yes, a prop­erty might have fea­tures like prox­im­ity to pub­lic trans­port, med­i­cal fa­cil­i­ties and schools, but what is driv­ing growth and on­go­ing con­fi­dence in the area?

“It’s re­ally im­por­tant to have in­for­ma­tion not just about a prop­erty and mar­ket sta­tis­tics but to also con­duct eco­nomic anal­y­sis,” Mr Press­ley said.

“Prop­erty is a com­mod­ity, it is shel­ter. Wher­ever there are more jobs, more shel­ter is re­quired.”

Mr Press­ley sug­gested look­ing at key in­di­ca­tors such as in­dus­tries and em­ploy­ers in the area, along with gov­ern­ment ini­tia­tives which af­fected the eco­nomic out­look of a re­gion now and in the fu­ture. Es­sen­tial el­e­ments to watch for in­clude eco­nomic growth, an af­ford­able me­dian house price and con­trolled sup­ply of fu­ture hous­ing. Crit­i­cally, that meant in­vestors should look be­yond their own back­yard. “A cap­i­tal city doesn’t mean blue chip. Parts of re­gional Aus­tralia have much bet­ter fu­ture prospects and cur­rent af­ford­abil­ity. If you close your mind to re­gional ar­eas you could be miss­ing fu­ture op­por­tu­nity.”

Fo­cus on af­ford­abil­ity

“Every in­vestor needs to un­der­stand all prop­erty mar­kets go up and down, and they will con­tinue to in the fu­ture,” Mr Press­ley stressed.

“If you’re in­vest­ing, en­sure you do so within your means. You need to stay within your house­hold bud­get and stress-test it. Fac­tor in get­ting only 48 weeks rent, not 52, look at to­day’s in­ter­est rate and then add four in­ter­est rate rises. “It’s also wise to know your on­go­ing hold­ing costs like coun­cil rates, body cor­po­rate fees, re­pairs and main­te­nance. Ac­count for be­tween $500 and $1000 in re­pair and main­te­nance ex­penses dur­ing a nor­mal year for ba­sics, but be mind­ful over three to five years there’s a chance a ma­jor item like a hot wa­ter sys­tem, stove or air-con­di­tioner will need re­place­ment.

“En­sur­ing your in­vest­ment is af­ford­able and within your means is key to be­ing ‘safe’.” Due dili­gence

While af­ford­abil­ity is crit­i­cal, due dili­gence is also im­per­a­tive, and that means seek­ing a prop­erty that is struc­turally sound. “Be­ing struc­turally sound and low main­te­nance has noth­ing to do with ap­pear­ance. It might look pretty, but if the work­man­ship be­neath the sur­face is poor, it’s go­ing to cost you. Call in the pro­fes­sion­als to en­sure it’s struc­turally sound.”

As for in­vest­ments to avoid, Mr Press­ley said ev­ery­day in­vestors should leave de­vel­op­ing to the pro­fes­sion­als.

“De­vel­op­ing re­quires dif­fer­ent skills to buy­ing an es­tab­lished prop­erty,” he said.

Mean­while, he also sug­gests in­vestors be wary of large-scale apart­ment com­plexes.

“Whether you buy a house or an apart­ment it is an im­por­tant de­ci­sion and whether it’s the right one varies from lo­ca­tion to lo­ca­tion,” Mr Press­ley said.

“Avoid big com­plexes of 30 apart­ments or more be­cause body cor­po­rate fees are higher and when it comes time to sell, you can al­most be guar­an­teed an­other apart­ment in your com­plex will also be on the mar­ket.”

PHOTO: COURTNEYK

CRIT­I­CAL EYE: Look be­yond the bricks and mor­tar when buy­ing an in­vest­ment prop­erty.

PHOTO: JEN ARC DAINER/IN­DUS­TRIAL

Prop­er­ty­ol­ogy’s Si­mon Press­ley.

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