Top 5 tips for buying a successful investment property
Cameron Deal, Director of leading Melbourne buyer advocateand property managementagency,infolio shares his top five tips for buying an investment property.
- 1. Plan and research your investment
Buying an investment property is a significant outlay, making the time to plan and research is essential to achieving a good result. Start by creating a long-term plan with a clear and realistic vision of what you would like to achieve through your investment. This should include working out a budget and considering whether you want your investment to deliver a high rental yield or strong capital growth.
- 2. Location is king
Look forproperties in established areas in areas no more than a 10-12k radius of the CBD that have a history of strong long-term capital growth. The location should offer good transport links, schools and recreational space. Avoid busy roads, property in earshot of train or tramlines and areas earmarked for significant development.
- 3. Seek scarcity and desirable features
A limited supply or unique feature will ensure strong rental demand and deliver healthy capital growth.Period styles such as art deco traditionally outperform newer properties. Desirable features such as balconies and car spaces can also add significant value to your investment.
- Don’t over capitalise
Buying within the median price of an area and being smart about renovations will ensure the property will be both easy to rent out and sell when the time comes.
- 5. Enlist the help of an expert
Enlisting the services of an expert at the vital stages of your purchase and the ongoing management of the property could pay dividends.
Engaging anexperienced buyers advocate takes the guesswork out of buying an investment property. A buyer advocate will help eliminate common purchasing mistakes, identify “investment grade” properties and negotiate favourable terms on your behalf.
Seek the advice of a financial planner to develop a framework around your assets and liabilities, select the best loan and use negative gearing as a tax offset.
Invest in the right property manager.Property management can make or break your investment – the last thing you want is a rundown property or unhappy tenants. Look for a committed property manager that cares about your investment, ensures the property has reliable tenants and that provides regular rental statements so you can measure your return.
For more information or a personal consult with Cameron Deal head to: www.infolio.com.au
The un-solvable problem!
We have come across an issue that in 15 years of property I have never dealt with before, I imagine this has happened to another property manager, somewhere but I personally haven’t.
So we have this beautiful fully renovated apartment in Hawthorn that we leased out to a lovely lady and her daughter, the principle tenant is a professional woman, hard working and sees her apartment as a refuge as most of us do. Anyway not long after occupying the residence she informs our property manager that there is a couple occupying the below apartment whom have a newborn baby, apparently this baby wakes up during the night (as most do) however it appears that they are attempting controlled crying and as a consequence this baby cries and cries from about 3-4am onwards, this baby is upset and cries for up to an hour and sometimes longer.
We sent a letter, emails and made calls to the owners corporation whom have been less than helpful, we understand they have a position on the matter that relates to not interfering with new parents but what I’m interested in knowing is what are the tenants right. The RTT act states that a tenant has a right to “quiet enjoyment” of their rented property and this clearly doesn’t fit the bill. Our tenant is now complaining of lack in productivity, sleep deprivation etc and whilst we have a landlord who whilst is extremely aware of the situation is unlikely to want to compensate and you have to wonder why it should fall on them anyway – so is it the landlord responsibility to compensate the tenants for the lack of quiet enjoyment even though it is completely outside their control, is it the owner corporations responsibility to work with the agent/landlord of this particular apartment with regard to a more favourable outcome or should the tenant just break her lease – and if she does, should she have to pay lease break fees??? Is this particular situation only difficult to resolve because it involves a baby?? I know that if we had someone who was a shift worker and made a big racket each time they got home in the early hours of the morning absolutely no one would have a problem bringing this to a head but what do you do about a crying baby???
So we had an onsite meeting with our extremely upset/hostile tenant – only a face to face will do under circumstances like these. We now have a new Owners Corp manager who seems to be working a little harder to help us sort out the problem, we are looking at better forms of insulation, and we are also looking at some form of compensation (not a decision we can make) but the idea is being entertained. Interestingly an issue the tenant had with regard to this situation was her perception that we were not actually doing anything to fix the matter – i suppose this comes down to understanding what matters a landlord/agent can actually handle – we can advise the O/C of an issue but it’s up to them to execute it. We have so many emails, calls etc to the O/Corp chasing a resolution but our tenant wasn’t privy to this... This is the beauty of property management; something new every day, there is always a problem to solve..... I’ll keep you posted on the outcome.
Here is a happy client! Awesome testimonial for Cameron received today…
I was in the unique position of wanting to purchase a house I had been renting for 9 years. When the house was listed at a price that I knew was well below its value I was very keen to secure it – the issue was that I was going overseas for 6 weeks so wouldn’t be around during the start of the listing period. I engaged Cameron to do the negotiations for me and he was able to use his extensive contacts to secure the property at even less than the listing price while I was overseas. I was completely rapt! On top of this I was able to get a bank valuation of the property which exceeded its value by over 5% - completely unheard of in such a conservative market. Couldn’t be happier with Cameron and Infolio’s service. Would definitely recommend and use their services again.
Lauren and Camerons predictions & tips for 2012
Everyone is an expert when it comes to property - don’t you think? Well as buyers advocates and property managers it is our job to be experts in property so like everyone else we are going to give you some tips and predictions for 2012.
First of all I will start by saying that you can’t have a blanket approach to buying a “good property” we recommend different things to clients depending on if they are looking for an investment property or a home to occupy. I’ll start with investment properties: A suburb we will be specifically looking to buy within for 2012 for property investors will be Armadale, this particular suburb has seen double digit growth for the last 30 years - it’s a no brainer that if we can secure a good property in Armadale our clients will see strong capital growth - yeas the entry base is quite high but the growth is strong and the rents also consistently increase, that being said we wouldn’t just buy anything in Armadale it will still need to meet our stick purchasing criteria. Another pocket we are particularly fond of is bayside, in particular Elwood, parts of St Kilda and Elsternwick. Elwood has also seen excellent growth and based on a Residex prediction they believe that all of Bayside will see continued growth by a further 8% over this coming year. Elwood is favored by us for a number of reasons - there is limited development, it’s close to the beach & city, the streets are lovely and tree lined, it has maintained its vintage and it attracts the highest number of female tenants than any other suburb across Melbourne. Now let’s talk North and West - these can offer better value to those with a lower budget as the entry base is lower, we are very pro Brunswick East, Yarraville & Seddon, however we recommend staying away from Sydney Road as this area is very pro-development and that can stretch to surrounding streets and lower the value of better properties due to a supply and demand issue. What should you stay away from - again keep away from pro-development areas, don’t buy on main roads, don’t buy house and land packages, don’t buy in large blocks and make sure amenities are good if you want to maximize yields and maintain strong vacancy. Houses: If you are looking at a suburb that will see strong growth we recommend focusing on Honesdale and Elsternwick - these are super suburbs with excellent amenities, lovely streets, great facades that are on the up.
So what do we predict for 2012. Well since the last interest rate reduction we have seen the first rise in property prices for almost 12 months, there is another 1 to 2 cuts expected this year and they will continue to shake up, or wake up buyers. The bottom has bottomed. We believe that there is still good buying to be had together with great opportunities to work your negotiation skills. We believe that much like the GFC people will realize that their jobs have remained stable, their incomes the same , the interest rates low and will start moving ahead - we believe that in 2012 there will be slow, steady growth in the property market. Ill come back to you after the next quarter to review how I’m tracking!
What are your thoughts on purchasing property without a carpark?
infolio's senior buyer's advocate, Cameron Deal talks to Australian Property Investor magazine about the value that car spaces add to properties in Melbourne. We have scanned the article in below, so feel free to have a read for yourself
Bayside is hot property
Image courtesy of Around The Region - aroundtheregion.com
In Saturday’s Herald Sun there was an article about predicted residential property growth across Melbourne. According to new data released by property analyst Residex, bayside suburbs located close to the city appear to be holding appeal with buyers. Suburbs including Elwood, St Kilda, Port Melbourne and Middle Park are all tipped for 8% annual growth over the next five years.
These properties will always hold very strong appeal to both buyers and renters. Ensuring your investment will have low vacancy rates and consistently strong capital growth. In the article Residex chief executive John Edwards highlights that the price adjustments throughout Melbourne aren’t universal and many bay side and inner city suburbs are escaping correction. Anyway, it's a good article and very interesting data. I have hyper-linked the article within this post if you would like to have a read for yourself!