How can you find a high-performing investment property from a distance? Here are a few tips to get you started.
Property is a popular investment vehicle for many Australian expats because it appears safe and stable.
It’s widely believed that all properties will grow in value, and that the “worst case scenario” is simply a lower rate of capital growth.
Sadly, this is not the case. As property investment specialists, Momentum Wealth is regularly contacted by owners of properties that have significantly dropped in value, severely undermining their investment goals.
Some properties have stayed stagnant and are likely to continue in this vein for a number of years to come.
One factor in buying a high-performing investment property is choosing the right location.
But what if things have changed while you’ve been working away? Some neighbourhoods improve over time, while others deteriorate or plateau once they have peaked.
How can you tell from a distance? Professional property analysts consider a wide range of factors in their research. Here are a few tips to get you started.
- Look for rising demand. Is there something about a suburb that will make it more popular in five years’ time than it is today?
- Look for new infrastructure – new facilities which make a location more convenient or desirable. But don’t sacrifice long-term desirability!
Many investors get hooked by the allure of a new school, train station or shopping centre, but if the suburb is still an hour from the main city centre, and lacks job opportunities then these amenities may not be enough to drive significant price growth in the long term.
- Look for signs of gentrification. If you see a large proportion of residents renovating and extending their properties, and new café strips or shops opening in an area, it often means that the demographics of a suburb are changing for the better. Rising household incomes support rising house prices, which is great news for investors who get in early.
So where do you find this information? As expected, there is plenty of information online, some good and some not very good.
For many expat investors, the logical choice is to hire a local property specialist to do the research for them.
Choosing “the one”
Even within a high-performing location, the wrong property choice could cost you significantly in lost capital growth, and even prevent you from buying more properties in the future.
There are over 46 factors in choosing an individual property such as: the market appeal of the house itself; impact of the neighbouring property; add-value opportunities; rental appeal; future property maintenance and repairs required; features and specifications; structural and building issues; price and scope to negotiate, and more.
Extensive research is critical to ensure that you aren’t disappointed with your choice. If you don’t have time to conduct this research yourself, a buyer’s agent can undertake it on your behalf.
When it comes to inspecting the property, it’s critical that you have someone viewing the property on your behalf. Some opportunities (e.g. a great floor plan, or room for a granny flat) or defects (moisture damage, issues with neighbouring properties) are impossible to see from photos alone.