Investing in property: The art of picking the right drivers for price growth
It’s all a question of demand and supply, and nowhere is that more critical than when planning a residential property investment.
The art of picking the right drivers for price growth is a tricky one.
You might have found the perfect property in a popular area with lots of jobs, a healthy rate of population migration and excellent infrastructure but if there are plans underway for 1000 new homes in the next year … suddenly, it’s no longer such a good prospect.
You also need to judge the demand for the type of property too.
There’s no point in investing in a two-bedroom apartment if everyone there is looking for four-bedroom houses.
Don’t be too entranced, either, by the promise of good capital growth in a spot where rents are low and there might be a high vacancy rate and too many days on market for property sales.
Uwe Jacobs, the founding director of Property Friends and author of the book, The 7 Secrets of Highly Successful Property Investors, says being enticed by the lure of negative gearing schemes is a common error of people trying to build a property portfolio.
“The main driver for investment is the balance between the short-term income of rental income and the long-term prize of capital growth,” he says.
“That rental money is what’s going to sustain you during periods of low, or no, capital growth so your investment doesn’t eat you out of house and home.
“The vast majority of people invest for financial independence, choices in retirement or leaving a legacy to children, so highly negatively geared properties aren’t the way to go. You need a more risk-averse strategy.”
That means not skipping essential research, he advises.
All factors like vacancy rates, days on market, median prices, growth forecasts, any upcoming property developments, and whether there’s an influx of people – or they’re leaving – are all critical to calculations.
“And you need to visit the area to check that it physically matches the research,” Jacobs says.
More than almost anything, the area where you’re considering investing should also be liveable and desirable.
This is an extract from Domain.com.au, written by SUE WILLIAMS | DOMAIN REPORTER SEP 15, 2021
Original article can be found here..