Buying property is a BIG step for a lot of people
But if you don’t know what you’re doing it can seem like a scary concept.
To ease the overwhelm and to equip you with the confidence you need to move forward, I’m laying out the most important principals you need to be across when purchasing your next property.
But first – most people know that generating sustainable wealth from property is a long-term game. You buy, you hold, you reap the rewards, right? Right!
However, the buy and hold method of wealth creation doesn’t work if you avoid buying to start with.
This year there have been an increasing number of people I’ve come across who love to talk the talk, but when it comes to taking action, can’t walk the walk.
We are surrounded by real estate opportunities every single day. And every day some of us are missing out because we’re too bogged down in the little details and nuances of every potential property.
What you need to understand is that what investing will do for you in the long run far outweighs these minor hiccups. You’ll never reap the rewards of the game if you don’t take action and join in.
So, if you’re umming and ahhing about a property right now wondering if it’s the right one, let me remind you that when following the basic principles of buying below, it’s hard to make a bad decision.
Population growth is a helpful measure to compare when searching for an investment property. It’s simply a case of weighing up supply and demand.
A growing population in an area means more people will need homes – right? So, the tipping point is when the demand of potential residents in these pockets grows at an increasingly faster rate than the supply of new properties on the market.
For property investors, this is a winning combination because it means the housing in those areas will then increase in value and price. So, keep an eye on forecasted population growth, particularly if there are contributing factors like new infrastructure that will lead to rapid expansion.
Infrastructure is a huge market driver for capital growth. In fact, the more infrastructure there is planned – providing it serves the interests of residents – the better.
Infrastructure services can essentially be broken down into three main categories: utilities, transport, and social (like schools and hospitals).
Do some research to see what current or future infrastructure spending is in place across both the private and public sectors. Ensure these are approved and funded projects, not just ones that have been talked about.
Local government approvals are a great starting point for this. Ensure you’re buying prior to the start of big construction projects, especially if your property will be close by to a site, as finding new tenancy during those works will be made more difficult.
The bonus of infrastructure is that it also promotes growth in the local economy. Employment rates as such are another good indicator of supply and demand. Bear in mind, national employment rates do not always reflect rates in specific locations, so it’s worth doing further research into the areas you’re considering.
Ideally, you’re already looking at areas with low unemployment rates. If those areas are also seeing an upward trend of rental prices with low vacancy rates you’re on to a winner.
Also make sure to look into major retailers who might be expanding their current operations or moving to the area. Having businesses like supermarkets, cafes, retail stores, and petrol stations nearby will not only increase tenant demand for your property, but they are also adding to economic growth.
Finally, avoid areas that consistently have high unemployment rates as these are unlikely to add any valuable growth to your property.
Of course a good, quality property is the last piece of the puzzle for a successful investment property.
Essentially your strategy will determine the type of property you buy. Are you looking to invest in a new build, or are you looking for a fixer upper that you can renovate and add value? Are you looking for house and land, or an apartment?
These decisions are dependent on your long-term goals and best discussed with a property coach or strategist.
Some important points to consider if you are not looking to funnel additional costs into the property from the get-go are:
- Is the size of the property suitable to the core demographic in the area? I.e. spacious enough for a couple, a family or a single?
- If it has a yard, is it easy for the tenants to maintain?
- Are the fixtures and fittings – both inside and outside – in good condition?
- Are the amenities up-to-date and in working order?
- Does it provide a clean base for tenants to enjoy and make it their own space? I.e. Neutral coloured walls and flooring
If you stick to these strategic buying decisions and ensure the property fits with your overall investment strategy, then the buying will come easily. You’ve done the work, now have the confidence to take the action.
For further insights into the 2021 market, check out our latest guide on where and what to buy in 2020/2021 or come along to our next free online property investment masterclass.
At this FREE seminar our property investment coaches will provide you with a wealth of information, discuss our proven strategies for buying, and offer you free advice on your next best move.
Spaces are always limited so register now to book your place.
CEO Positive Real Estate NZ
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