Some guide­lines for in­vest­ing wisely

Whitsunday Times - - REAL ESTATE -

AS MORE than a mil­lion prop­erty in­vestors around Aus­tralia will tell you, buy­ing an in­vest­ment prop­erty in­volves a great deal of for­ward plan­ning, not un­like the pur­chase of a fam­ily home.

But while the de­ci­sion to buy a home to live in is usu­ally quite emo­tive, buy­ing an in­vest­ment prop­erty should be solely based on ra­tio­nal and prac­ti­cal con­sid­er­a­tions.

“In­vestors have to re­mem­ber that where a fam­ily home is a pur­chased from the heart, an in­vest­ment prop­erty is very much a pur­chase from the head,” Real Es­tate In­sti­tute of Queens­land (REIQ) CEO An­to­nia Mer­corella said.

“It is a busi­ness de­ci­sion, and like any busi­ness de­ci­sion, it must be un­der­pinned by a well re­searched busi­ness plan.

“Prop­erty has been, and al­ways will be, a good fi­nan­cial in­vest­ment as long as peo­ple take the nec­es­sary steps to en­sure they don’t get caught out.”

Un­less in­vestors have done all their home­work, they could find them­selves stuck with an in­vest­ment prop­erty that can­not be rented due to poor lo­ca­tion or de­mo­graphic fac­tors. As a re­sult, they may wind up hav­ing to sell it for less than they paid.

To min­imise the risk of be­ing lum­bered with a bad in­vest­ment, the REIQ rec­om­mends buy­ers do their home­work and re­search the area they in­tend in­vest­ing in.

“Try to en­sure that the rental mar­ket is strong in the area you pur­chase prop­erty in," Ms Mer- corella said

“The REIQ pro­duces a quar­terly re­search pub­li­ca­tion called Queens­land Mar­ket Mon­i­tor, which con­tains very use­ful in­for­ma­tion about the lo­cal mar­ket, in­clud­ing va­cancy rates and me­dian weekly rents.”

Not only does a buyer need to know what price they can ex­pect to pay, but they also need to be aware of what sort of re­turn they can ex­pect from their in­vest­ment.

Dis­cuss your fi­nan­cial sit­u­a­tion with an ac­coun­tant or qual­i­fied fi­nan­cial ad­vi­sor and en­sure that your sit­u­a­tion will al­low for pos­si­ble in­creases in in­ter­est rates or a pe­riod of time when the prop­erty may be va­cant and with­out a ten­ant.

A good tip is to check the prop­er­ties for sale online. Find prop­er­ties with sim­i­lar fea­tures and com­pare their prices.

“There will, of course, be some prop­er­ties that are worth more than oth­ers be­cause of cer­tain at­tributes, such as prox­im­ity to wa­ter or public trans­port,” Ms Mer­corella said.

“But this sim­ple re­search should prove a valu­able guide to de­ter­min­ing what is on the mar­ket, and at what price.”

The sorts of fac­tors im­por­tant to most ten­ants in­clude: be­ing close to public trans­port, hav­ing ac­cess to com­mu­nity in­fra­struc­ture such as schools, shop­ping cen­tres and med­i­cal fa­cil­i­ties.

The stu­dent ac­com­mo­da­tion mar­ket is an im­por­tant con­sid­er­a­tion for many prop­erty in­vestors and, to tap into this seg­ment, in­vestors should fo­cus on the sub­urbs within five kilo­me­tres of a ma­jor ter­tiary in­sti­tu­tion.

Another tip is to talk to an REIQ-ac­cred­ited agency, who can pro­vide in­formed opin­ion on mar­ket trends.

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