Identifying the best suburb and property for your next investment purchase isn’t as simple as finding an area with a low buy-in price.
Before you begin investing, or undertake the process of purchasing another property, you need to formulate your strategy identify:
* The ‘reason’ you are investing (your tangible goal)
* How to locate the ‘regions’ to invest in (what fundamentals to look for in an area that will assure capital growth)
* How to lower the ‘risk’ when investing within certain price bands in an area (how to keep your deposits safe and not lose money)
The next aspect we need to look at is the type of property itself, and the micro research we need to do in an area.
WHERE TO BUY
When investing it is always good to enter into an ‘emerging area’. If an area is constantly in the media, or has been thrown around in conversation and seminars over and over again, then it may not necessarily be the right area for you because the market may already be overheating due to media scrutiny. Just because a suburb has a cheap entry price, does not automatically make it a good investment area – the fundamentals need to be present as well.
Rather than simply following media chatter about hotspots, I prefer to predict what is going to happen in an area based on imminent changes, such as the dilution of housing commission content, new developments and indeed, changes in a council’s appetite for developments, along with all the normal employment drivers.
If the area has had media scrutiny, I also look at all of the surrounding suburbs and see which ones will most likely experience the flow-on e ffect. Keep in mind that in any CBD there are desirable and not so desirable satellite suburbs.
WHAT NOT TO BUY
It would be prudent to identify what types of properties not to buy in an area. In certain suburbs a house may not rent out as easily as a unit because of the area’s demographics, or vice versa.
I make these decisions by simply talking to property managers in the area, which also gives me a good feel for where the less desirable streets are. This process has the added benefit of helping me to identify good property managers in the area. It’s important here to focus on the person rather than the brand name.
Once this is done and I have identified the price limits for my units and houses, I am then ready to start making o ffers on properties. Of course (and I am stating the obvious here), you do need finance to be pre-approved before you start!
Victor Kumar
Nearly 15 years ago Victor and his wife came to Australia from Fiji with just $4,500 in their pockets. They worked hard as radiographers but realised this was not the way to prosperity. Victor embarked on a process of building wealth through property. He has amassed a substantial property portfolio, and is still actively buying and renovating property. His recommendations are based on what works in today’s market, not what used to be effective a year or more ago.
Victor’s experience, finance background, and financial planning qualifications mean he is well equipped to negotiate with banks – helping them find ways to say “Yes”. He has also invested significant time and money in learning from other property investment experts and knows how to make a portfolio work.
Of course, Victor has made a few mistakes along the way but these have made him wiser – and he’ll let you learn from his mistakes so you don’t need to make them. His goal is to help you achieve your financial goals by sharing his extensive knowledge about financial structures and investment property.
Victor is now sought after as a keynote speaker at several property investment seminars and is acknowledged by his peers as an expert in the industry.
