Which property investing strategy do you focus on as an investor?
What if you’re starting out or you’re a more experienced property investor wanting to accelerate the growth of your property portfolio? Do you use a positive cashflow property investment strategy? Why positive cash flow properties?
Firstly a positive cashflow property investment strategy is one where the rental income from property exceeds all costs of ownership, including interest, council rates, insurance, property management and any other holding costs.
In other words, positive cash flow properties can actually put money in your pocket each month and as a result is paying you to hold the property. Get enough properties like this and you could replace your income and retire, if that’s your plan?
Positive cash flow properties sound almost too good to be true, right? Many property investors can’t believe positive cash flow deals exist in today’s property market. They believe cash flow property can’t be found as property prices went up faster than rents.
In fact, great positive cash flow properties can be found right now. If you understand how to look, what to look for and the secret to choosing the right positive cash flow property in the right area, you can get positive cash flow and capital growth in the same time…
Positive cashflow property investment strategy…are you an investor worried about what’s happening to the value of your properties?
Are you stuck or hitting a financial brick wall with you portfolio and can’t seem to move forward?
Fortunately there is a positive cashflow property investment strategy for making significant money which doesn’t rely on market-driven growth for success, and actually allows you to keep borrowing more to get multiple properties.
Understanding how to find and invest in the right kinds of positive cash flow deals allows you to buy literally dozens of properties, and effectively get paid to hold property regardless of what direction the property market goes in today’s property market.
Because in a flat or falling market, which is the market we are in today, do you want to see real-life current market examples of deals where you can buy properties with rental returns above 10 per cent, delivering substantial positive cash flow?
P.S. Would you want a massive instant equity gain? How about buying into a fully rented property, which delivers positive cash flow from day one? What if you can even subdivide the property to add more value…
Property research made easy because there is such a wide range of information available to homebuyers and property investors, but it can be overwhelming if you don’t know where to start…
For example you are confronted by auction clearance rates, vacancy rates, pending building approvals. Not only are all these stats and figures overwhelming, it can confusing for some too. So…would you want to buy a property without proper research?
Property research whether you are purchasing your first home or starting an investment portfolio, the traditional methods of research such as websites, magazines, news reports and company announcements are always a good place to start.
However, the property research you need to do varies, depending on your end goal and/or profit targets.
If you are looking for your primary place of residence, factors such as proximity to family and friends, layout and design and overall feel have a major effect on the area and property you choose.
What if you are purchasing an investment property?
Your property research would focus less on personal preferences and more on what adds value and maximises the cash-on-cash return for your investment.
You want to consider a rental yield of 9% or higher because you are basing your research on how much this suburb has risen in value historically, and whether there is a potential uplift to add value through a renovation or the property meets requirements of tenants.
There are four key factors which you want to consider when starting your property investment research.
Property research for location: In particular, you want to consider the proximity of your property to public transport, schools and employment opportunities.
Areas in close proximity to the CBD in major cities have a real advantage when you consider the above factors. However, if you want to enter these areas today, you need to pay a premium and of course this depends on your financial circumstances.
Property research infrastructure: If the well-developed areas near major cities are out of your price range, you need to make special consideration for current and future infrastructure which may make an outer ring suburb more accessible in the future.
If you can ideally select these suburbs early, you would be able to snag a bargain and see significant increases in value (capital growth) as the infrastructure develops…
It’s easy to assume capital growth and decline looking at median price of a suburb alone, however it’s not accurate. There are sub markets within a city and even in a suburb, individual properties can attract different levels of demand.
Property research affordability: There are two key considerations to look at. Firstly, you need to sit down and work out how much you can afford to spend on your investment property, taking into account stamp duty, legal fees and property management fees.
Secondly, you need to consider the demographics of the area you are purchasing in and decide whether your target market (potential tenants) would be able to afford the rent you hope to achieve.
Even when median prices are falling, there are pockets of opportunity in each city which bucks the trend. The same applies in growth cites as not all suburbs perform the same way. In fact, each suburb behaves like a mini-housing market according to its own dynamics.
Finding suburbs with potential for price growth may not even be your primary goal, especially if you’re thinking of buying your first investment property and don’t know where to start?
What if you are an experienced investor motivated to avoid repeating past mistakes?
Property research because you need to avoid the persuasive high rental yield areas caused by falling prices, suburbs where prices peaked and are just about to crash. These locations have rising rental vacancies and of course leave you short on rental income.
The best property investments are found where the rent more than covers all outgoings, including your loan repayments from day one and local property market has power to provide rent increases and price growth.
Perhaps you don’t have time or resources to do due diligence and analysis to locate these hidden suburbs, so where can you find them?
Property research, there are a number of amazing resources available to property investors and homebuyers looking to enter the property market, so you don’t want to limit yourself to only researching via online resources.
An experienced team of experts can be worth their weight in gold throughout your property investment journey. If you would like more ways to ensure the success of your property research or information on how to begin you research, contact us today using the form below…
Thinking of buying off the plan investment property?
Buying off the plan property is one topic which generates more grumblings, rumors, and misinformation than any other investing strategy. When it comes to property investing, timing matters, right?
In context to “buying off-the-plan” does it mean safe, predictable returns and annual rental increases?
The purpose of buying off-the-plan is no management fees, vacancy periods with security of a long term lease, so you can live comfortably knowing your future is financially secure; buying a block of land without actually seeing the property before sale, right?
What’s the reason why many property investors like to buy off-the-plan? Obviously they want to make sure its as safe or as less risky investment with reliable and high rental yields…yet are they’re speculating that the property will be worth more when it is completed?
Is off-the-plan properties a good solution for investors needing to organise finances or first home-buyers which don’t have enough equity to purchase?
Would an established property which you can buy today, whereby value is easy to confirm and rental return is more assured? Confirming an accurate future rent return is also nearly impossible, as this is affected by demand and supply.
Where the development is large, depending on release dates or time frames, there could also be a sudden oversupply as all the completed developments become available and you could get far less rent than expected causing further financial distress to you.
While buying off the plan is an option may offer benefits, it’s important for both investors and home buyers alike to perform their due diligence and understand where many trip up.
Buying off-the-plan property, in reality…unless you’ve done this type of property investment strategy before, does it really mean the value of a good investment property is underpinned by attributes such as:
When looking for an investment it is vital to focus on the tangibles which over time change because need to establish the value of your finance commitments in context to your investment finance criteria:
Supply and demand
Median value growth
New DA applications
You cannot just move a house and land and drop in in a more desirable or handy location a few years after you buy it, right?
Even at great expense, you’re most likely not able to change orientation of land, position of block of townhouses/apartments or what surrounds the property. In reality, you have no control over the supply of new property coming onto the market around you…
Good investment property is often very hard to buy because you are put in a competitive environment, while risky investments are often easy to buy. Buyers need to understand the market and why they’re opting for off-the-plan instead of an established property.
Buying off-the-plan property carries far greater risk than an established property and has little advantage.
It’s very difficult to establish whether buying off-the-plan property is at a fair market value, even a registered valuer cannot forecast future values accurately to assure what you’re buying is going to be what it is worth when completed.
When you tie up your borrowing capacity on a yet-to-be completed project, you may not be allowed by the bank to borrow for additional investments, as your true position cannot be determined until the property is complete and owned by you.
If you’re getting a loan to buy property off the plan, what if the property has a value less than you agreed to pay?
Firstly, you may not be able to borrow enough cash to complete the sale because your bank will use the valuation, not your purchase price to determine how much they will lend you.
Off-the-plan, while this may sound straightforward, there are a number of considerations to take on board. If you cannot complete the purchase due to lack of funds, you’ll be forced to move forward at risk of losing your deposit.
Buying off-the-plan property and tracking changes: For example, off-the-plan apartments run work on the concept of putting down a deposit today and waiting for capital growth to kick in by the time the property is completed.
To avoid a potential purchase disaster, property investors need to put in the hard yards and do their on-the-ground research. The most crucial factor is knowing your target market, demographics, infrastructure, and whether the market is going to be over or under-supplied and to understand specific economic impacts of the area.
Due diligence: As a property investors you would talk to local councils or visit Department of Infrastructure website to find out about projects that are underway or in the planning stage.
Buying off-the-plan property by analysing supply and demand: it is critical to understand the strength and amount of supply in the existing market, because as a property investor you also need to be aware of other properties becoming available.
Equally important are population growth and job opportunities in the area; this data can be used to compare the last Australian Bureau of Statistics census against the most recent census to get a snapshot of how an area is changing.
For investors, historical trends such as vacancy rates and rental yield growth rate are indicators to consider, including how vacancy rates performed over last five to ten years and which figures have established a sub-two percent as a good benchmark.
Buying off-the-plan contracts: Buying off-the-plan property involves entering a contract to buy a property that is not yet built. Investors therefore need to find a professional lawyer who is able to comb through the details of the contract with them.
As a property investor you need to make sure you are happy with the length of sunset clause you understand the full extent of the contract in every complete and detailed ways as possible…
Buying Off-the-Plan Property
Australian property investors guide to property investments now, where to buy investment property, positive cash flow property using proven strategies to create wealth and financial freedom