Buying the right investment property is the key to a successful property portfolio.
The most common words of wisdom heard from those that do well with their investments are;
- buy with your head, not your heart; and
- the profit is in the purchase
This is where most investors and especially those new to property investing, go wrong. Most tend to treat buying an investment property just like buying their home, which translates to an emotional buy.
When it comes to buying right, this is where most go about it the wrong way too.
Ultimately, when we want to buy any other product at the best price, we look at ways to buy from those that need to sell; how we can get it at a reduced price; buy it at wholesale or direct from the producer.
Coming to property, most investors look only at the retail end, which in most cases means that they are paying a premium price to begin with.
The biggest profit is made at the point of purchase.
I know myself and have been told too many times from successful investors to ignore. It surprises me how many new investors make some of the most common mistakes and all too often costly ones. Mostly, at the time of purchase.
While, there is a myriad of resources and information available in the market to identify the best areas and spots to invest in, many newer investors tend not to know how to access the right data and use this information in the best way, in order to buy right, and often end up making unnecessary mistakes.
Here are some points that are important in property investing:
- Always look for strong growth opportunity areas where the property is located in close proximity to public transport, work centres, shopping, good infrastructure and education
- Get pre-approval of your finance, allow for some flexibility and don’t over-extend yourself
- For an investment, let the numbers do the buying (head), not the heart (emotions)
- Speak with a professional versed in property investing about how best to structure your investment, i.e. buying it in a trust or entity rather than your own name, using your superannuation/SMSF etc.
- Do thorough due diligence and look at growth patterns and history before you buy, making your decision based on facts rather than word of mouth
Too often people are buying investments based on hearsay and second hand news, which often means that there is a lack of facts and thorough research.
Buying right, does make all the difference. It is important to remember wherever you buy, even when you are buying off-the-plan, the agent is selling for the vendor/developer and the aim is to sell the property. Many investors forget that this is the underlying principle when they start looking at properties.
That is why it is so important to be selective to ‘who’ and ‘what’ you are listening to.
There are plenty of investing seminars out there and stock to be found, but it is advisable to look for an experienced property investing coach before you rush out and buy something, especially if you are new or inexperienced to property investing or don’t know the area you are looking to invest in.