The 10 key things every property investor should know

Our property markets have turned the corner and there are more people interested in getting into property investment.

However, if history repeats itself (and it most likely will), while some will develop financial freedom through property, many investors won’t get past their first or second property.

So how do you succeed? Where do you start? There are so many options out there, everyone seems to have an opinion and many of their suggestions are conflicting.

To start you on the right path I’d like to help by suggesting 10 questions that I believe all budding investors needs to get their head around before buying into the property game.

1. What do you want to achieve?

Is it money? Wealth? Financial freedom? Maybe all of the above!

Remember the bricks and mortar are not really the end goal; rather they’re just the vehicle you choose to get there.

So, firstly, identify your end goal and then formulate a plan to get you there in a timeframe that works for you.

You see, property investment, as with any other journey, requires you to know where you’re heading and how you intend to get there.

Unfortunately, most investors don’t have a plan and that’s why they get lost along the way, get distracted by the latest investment fad or the next ‘hotspot’. And if they do have a plan they rarely review it to make sure they’re on track.

2. What is your preferred strategy?

Once you know where you are going you need to implement an investment strategy that helps you get there.

Since you can’t save your way to wealth, your goal should be to build a substantial asset base through capital growth. My four-part strategy to achieve this is:

1. Buy a property below its intrinsic value

2. In an area that has a long history of strong capital growth

3. Look for a property with a twist – something unique, special or different and

4. A property where you can manufacture capital growth through renovations or redevelopment.

3. What type of property?

You need to own the right type of property; one that will be in continuous strong demand from both owner-occupiers and tenants, because the former push up market prices, whilst the latter help to pay your mortgage.

Today, more people are trading their backyards for balconies and that’s why I prefer inner-suburban apartment-style accommodation.

4. Should you buy something old or new?

More often than not, new or off-the-plan apartments are a ‘box’ in a high-rise monolith. The problem here is that you pay a premium to the developer and miss out on the first few years’ capital growth.

At the same time the majority of owners in the building are likely to be investors. I prefer buying where owner-occupiers, who look after the building better, predominate.

If you haven’t guessed it by now, I prefer to buy an established apartment, in a character-filled block, which has the potential to be ‘tarted up’ with cosmetic refurbishments.

This gives you the potential to not only increase your rental income, but also manufacture some capital growth.

5. Where should you buy?

Location is critical to the long-term performance of your investment. I look for suburbs that have always outperformed the averages or ones going through gentrification.

These are generally lifestyle suburbs in major capital cities close to the CBD, amenities or water.

Then I drill down even further and choose the best spots in those suburbs.

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