We have been looking for an investment property and can see the local market is hotting up. Have we left our purchase too late? What tips do you have for buying in this type of market?
A. Yes, there is clear evidence that the market is on the way up, but you haven’t missed out. In recent years the residential property market has been stagnant, so it was only a matter of time before a growth spurt (in both price and volume) would be experienced.
There are plenty of investors looking to take advantage of low interest rates by purchasing now. There is no reason why you should not too; just take the necessary steps with diligence and caution.
Savvy investors take a long term view of property investment. My advice is to aim to invest long term, ensuring you experience the peaks as well as the troughs.
Smart investors also look for strong yield. The old rule of thumb for residential property is that weekly rent should be at least 0.1% of the purchase price (for example $360+ per week for a property listed at $360,000). This equation can be applied in most circumstances, but don’t be put off investment properties with low rental returns that offer other appealing features that may drive above-average future capital growth. Perhaps that ugly house on the fringe of the industrial area has future development potential, or that ‘tired’ looking apartment is crying out for simple renovations to improve the rent return.
Look beyond the exhilarating headlines in the capital city newspapers and choose property that will continue to perform over the long term.
Whatever the market conditions, make sure you are in a position to swiftly secure the right property. Have finance organised and your consultants ready to quickly effect an exchange of contracts and make sure you check all the facts with experienced advisors.
Good luck, and let me know if I can be of any assistance.
Answers are general comment, and readers should always seek their own independent professional advice.
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Greg Trembath is Principal/Licensee at
Greg Trembath Real Estate.
Licensed Real Estate Agent – Licensed Auctioneer.