First of all, if you haven’t read the first part of "My first property investment" story, I’d suggest that you go and read the Part I first here before continuing on. It covers the basic of property investment.
So, you have decided to take one of the biggest step in your life? Good. Now, the next step is the most important part in a property investment: choosing the right property!
5 Tips on choosing the right property for your property investment
(1) Property Type (An apartment unit? A house? A commercial property?)
Choose wisely, because once you "sign the contract with the devil", there is no turning back. In my opinion, an apartment unit is not worth it as you don’t get a land (and land’s value is always up). I didn’t go for a commercial property as it tends to be more expensive and you need to find a business to rent the place, which is harder. So, I’d suggest choosing a residential property instead for your first investment.
(2) How much do you want to spend?
This is crucial as well. It all depends on your financial situation at the moment: how much is your current salary, how much is your savings, what are your expenses per month, etc. You don’t want to spend too much investing, but at the same time, you shouldn’t invest on a property just because it’s cheap. Your property consultant, or if you have a financier, can usually give this information to you (a rough indication as to how much you can spend). Remember, because you have to pay your loan interest from the bank every month, you need to have a good cash flow.
(3) Where?
This is the MOST important part of property investment. Location, location, location! You should invest on an area where it’s close to public transports or highways, close to a hospital, and especially, schools. But more importantly, you need to do a research whether there’s going to be a new development around the area! You want your property to increase not just as soon as possible, but also as much as possible! There is no point investing in a stagnant area because your property’s value will not be much different from when you first bought it.
(4) Leave your emotions behind
Remember that you are going to rent your property, not living in it. Therefore, throw your emotions away! Stuffs like: "But I like a house that faces North", "I always want a house that is painted in all white", "I never like a house with a backyard on it". Remember this: as long as you have a tenant, who cares whether it’s painted in purple? Or whether it has an air conditioner? (Unless of course by installing an air conditioner, you can get a much better lease price)
(5) Once you find what you are looking for, grab it NOW
I’ll say again, NOW. Chance is that there are other people doing the same thing as you and probably looking at the exact same property you’re after.
When you delay, you may lose the only opportunity you’ll have.
When you delay, the value of the property will increase again; meaning you could get the same thing with less money, a month ago.
When I bought my investment house back in December 2007, about a week after I bought it, the property price had increased by $20k! If I waited for another month to take the decision, then I’ll regret it for the rest of my life.
{ 6 comments… read them below or add one }
I recently bought a property in Frankston, so I totally agree that you can never get in too early. The place has already gone up by $50k.
The longer you wait the more & more you get priced out of the market.
Best of luck!
Stu’s last blog post..Comprehensive Car Insurance
Hi Stu,
I’ve bought my property (still a land at the moment) a couple of months ago, and rumors said that the land value in the area has already increased by around $30k now!
When I bought it, I had only one night to decide whether to buy the land or not. I never regret that decision til now
Part III has just been posted: http://www.cravingtech.com/blog/2008/02/my-first-property-investment-part-iii-forming-the-right-team.html
With the current credit squeeze going on, if you have the disposable income it’s probably an excellent time to get into the market, as there is basically a fire sale right now regarding property.
In about a year or two, once things have stabilised and improved, you would have made an absolute killing!
Well the property is booming now in Melbourne (where I live) and a lot of interest rates are spiked everywhere.
It’s really mad at the moment and starting to go down as families can’t afford to pay for the mortgages.. Lucky I already got there in time!
Hi ALL,
This is my first day of discovering this site / blog and already I am posting a comment. hope to get to know you guys and together we can increase our knowledge. I actually stumbled across the ranking in Google for this site when i was looking for some OZ blogs and forums to subscribe to (relating to investing in property), so I can get more links to my website that I am building / getting built at the moment.
I read the various comments and am impressed how positive they are. I am (an older) property investor with 5 properties and have actually just formed an association with an investment property company in Sydney.
I am not only looking to purchase my next property through them, I have also been given an incentive to refer others to their Seminars.
They are probably the most progressive company around in the industry (from my research) and they were in the BRW Fast 100 Companies last year at #44. Not a bad achievement. Their seminars are 80/90% about general market info and “food for thought” and some info about what, when, where, why in relation to property products they are involved with at the moment. Quite an informal seminar, fairly small (about 20/30 max) and a “bite to eat before they start. The next one is at their office in Walsh Bay, (Sydney) on July 30 if anyone is interested. I am taking a couple of people along for the education so if anyone is interested let me know and I will arrange a spot.
Look, I’ve said up front that I am being given an incentive to get people to consider becoming clients with them; but this is a very relaxed atmosphere; you are there to get some knowledge; and if you eventually are interested and get a property through them I will be rewarded. Otherwise I get nothing / zilch, so come for some free food and a bit of info if you like. it all helps to get past that fear barrier when you digest each little bit of info. don’t you agree??