10 things you must consider when buying an investment property | Michael Yardney [Podcast]


With the property market doing so well, obviously more people are interested in getting into property.10495154_l

We can see that in the numbers, too, of people coming to listen to Real Estate Talk.

It’s always great to have new people listening to us.

We’re here to help you work out a plan to succeed.

There are some things you should consider when buying an investment property.

In this Real Estate Talk show you will hear the 10 things you must consider when buying an investment property with Michael Yardney, from Metropole Property Strategists.

Here’s a transcript of the interview:

(Alternatively you can listen to the short podcast at the top)

Kevin:Michael Yardney from Metropole Property Strategists is here to walk us through the ten most important things.

What advice would you give new investors, Michael?  The most important things you think they should consider. michael-yardney2

Michael:  This is a good way to start, but it is also a good recap for people who are thinking of getting into the market again.

The first step is asking yourseld “Why?”

What are you trying to achieve?

Is it money?

Is it wealth?

For most people, it is financial freedom.

Remember, the bricks and mortar really isn’t the end goal.

Rather, it’s the vehicle to get you to what you want to be.

Therefore, treat property investment as a journey, and don’t get lost along the way.

The next step then is to understand “What strategy are you going to put together to get you there?”

My preferred strategy is high growth properties.house-growth

Some people look at cash flow, but my strategy is to buy a property in one of the big capital cities that has multiple pillars of growth drivers.

I look for properties below their intrinsic values in areas that are going to perform well in the long term.

It has to be a bit unique, a bit different, or special, and I like adding value.

That’s the sort of strategy that I suggest people consider.

Kevin:  What about the type of property?

Michael:  You need to own the sort of property that’s going to be in strong demand by – in my mind – owner-occupiers.

Most investors think like investors, but an investment-grade property is an owner-occupier property, not because you’re going to sell, but because owner-occupiers are going to buy similar properties around you, pushing up the value of yours.

Over the last years, the trend seems to be more people are trading back yards for balconies, they’re going to want to live closer to the action in the inner suburban areas of our big capital cities, and many of them are in apartments and townhouses.

Kevin:  What about deciding between old or new? Should that be a consideration?

Michael:  It definitely should.

I like new properties, but I don’t like paying a premium for them.

Many new properties currently are in those large high rise monoliths, which don’t have a level of scarcity.

I’d rather buy an established property and add some value manufacturing some capital growth.

Kevin:  How particular are you about where you buy?

Michael:  When you buy a property you have three things to play with.

You have your price, location, and the type of property.

Price is usually determined by your lender, so you haven’t got much say in that.

Location is the critical one –  where you buy?

If you can buy in a good location but you can’t afford a home, I’d be buying an apartment.

Location is going to be the difference between those properties that outperform and those that don’t.

Kevin:   On a regular basis, I record some videos with Michael on the common mistakes investors make.

Recently, Michael, we talked about the timing of the market and when you should buy.

Michael:  There are investment opportunities at most stages of the cycle.property time market clock house cycle investment timing watch growth

I’ve found most successful investors can make money at any time.

Sometimes it’s going against the crowd when the market is quiet, but even in these strong markets, there are opportunities.

The right time to buy is when it suits your personal financial circumstances, and then what you would amend is where and what you buy.

But there are  always opportunities

Kevin:  What about when investors ask themselves: “What I can afford, and how I should structure it?”

Michael:  The first way you would do that is to go to see a proficient finance strategist – not necessarily the bank, but someone who understands how to set your finances correctly.

I’d always suggest you get your loan pre-approved, because that is going to be one of the factors that affects where you buy and the sort of property you can buy.

Also, I’d be speaking to accountants about the right ownership structures, the right entities.

It could be in your own name, it could be in a trust.

Some people buy properties in self-managed superannuation funds, but you have to be very careful and get the right advice if you do that.

But you have to do that beforehand,  because you have to get the finance in the right entity.

Kevin:  Who should investors ask for advice?giving-advice

Michael:  If you think you’re the smartest person in the room, you’re in trouble.

Residential real estate investment is a team sport.

You need to get a good accountant, a smart solicitor on your side, and a good finance broker.

In today’s world when the other side – the seller – has agents or marketers on their side protecting them, you should also have an independent property strategist on your side protecting you.

Kevin:  Would it not be wise to get advice from friends and family?

Michael:  Unless you have multi-millionaire parents, the answer is probably “No.”

Everyone has an opinion on real estate.

Everyone thinks they know about it because they live in a home, but the simple answer is unless you’re getting advice from wealthy people, I would be having fun with friends and family but not necessarily asking them for mentorship in wealth creation.

Kevin:  Great advice. Michael Yardney from Metropole Property Strategists.

Michael, thank you so much for your time.

Michael:  My pleasure, Kevin.

Listen to the full show at RealEstateTalk.com.au and while you’re there subscribe and receive our weekly podcast (or the transcripts) where I interview Australia’s leading property experts. 

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Australia's leading independent property commentator, brings together leading authorities on the property market. Each week at Real Estate Talk we take a fresh look at the property market so you get all the facts to help you make the right choice.
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