If you want to reap the rewards of property investment then you must heed the rules religiously. You should know the right price to pay and also the right place to buy among other things.
Pay the right price
Buy low, sell high – sounds simple. Yet many investors fail to do their due diligence before signing on the dotted line. Using tools like realestate.com.au/invest can give you an insight into market trends and an indication of the current market climate. Also, finding out what others have paid for the same or similar properties can give you a more accurate baseline for making an offer. The moral? Do your research and never overpay again.
If the adage ‘location, location, location’ is true, then it definitely applies to existing or potential infrastructure near a property. Always evaluate a potential investment property’s access to freeways and public transport, and research if the area is slated for new investment and development down the road.
You should not invest without knowledge and you should not invest on hype. Get your facts right. Do a lot of research. Do not just swallow information, investigate and clarify it.
Research, research – then research again
Despite his estimated wealth of £73million, Caan insists on pounding the pavements himself. He calls it the sniff test.
"I need to walk the streets, know who owns here, who the tenants are, what the traffic's like," says Caan, 48, as he strides along Mayfair's Grosvenor Street, home to one of his latest acquisitions: a period building "bought for considerably less than what it was worth earlier this year" that will be the new office of his private equity firm, Hamilton Bradshaw.
"There's no point sending someone else out for you, then asking what they think of it. You have to see it for yourself. I love this street," he says, marvelling at his Mayfair address. "It's wide and one-way, so it's much quieter than all the others around here. I wouldn't have realised that if I hadn't come here myself."
You should also know and understand the market trends. What makes the market move in a certain direction? What do the millennials want, where do the investors get their information from and so on.
Understand that demography drives the market.
There are some alarming structural changes and a massive demographic shift taking place right now that will affect Australian property values and our economy at large. I started talking about this shift (Australia's ageing population) and generational changes way back in 2007.
Back then people thought I was crazy. Today it's the topic of the century.
Despite our newfound 'street smarts' though, the property spruikers continue to promote the wrong types of properties in dubious locations and stitch people up by calling it "negative gearing". Correct me if I'm wrong, but I've always believed that an investment property was an asset, and assets are meant to make you money.
But as the spruikers claim: "The property market doubles every 7-10 years", "Buy negatively geared property and you'll be a millionaire" "Buy in one-horse mining towns"... I've heard it all and it still disgusts me.
Today's investor can no longer rely on luck or advice from family & friends. You need to rely on thorough research, your own judgement along with a healthy financial education.