If you've been listening to my podcasts or reading my blogs, you'll know I have a number of rules and frameworks to help my property investing.
By having these it takes the emotion out of investing and makes the results more predictable, but what's the most important golden rule of property investing?
That's a question I'm going to ask today of leading financial advisor Stuart Weymss, who's written a book about the golden rules of investing so let's see which rules have stood the test of time.
The Golden Rules of Property Investing
What's the most important factor in your property investment success?
Well according to leading independent financial advisor Stuart Wemyss the most important rule is the quality of your assets.
But what does this really mean and can really be as simple as that?
- So, let's start with the obvious question - what does quality mean?
- Quality really means that a property will benefit from excessive demand.
- What investment-grade means
- The supply-demand equation
- Limited supply
- Demand is diversified
- Look for properties that attract buyers that can and are prepared to pay more because of their higher incomes.
- Factors that drive demand.
- Amenities. This includes necessities such as supermarkets, family doctors, dentists, etc. Equally important are entertainment amenities including cafes and restaurants, entertainment venues, parkland including running and bike tracks, and so on.
- Proximity to employment opportunities. There will always be substantially better employment opportunities in large capital cities for most industries.
- Schools. This can include sorting after public school zones as well as desirable private schools. Proximity to schools can contribute a lot towards capital growth.
- Culture/community. It’s a positive attribute for a location to have a good community vibe/feel. This is often present in local shopping strips and the mixture of businesses adds a lot to this attribute. Some inner suburbs lack this and it’s to their detriment.
- Healthcare. Proximity to hospitals is important to some buyers, particularly older folk.
- Transport. This includes good public transport easily within walking distance as well as major arterial roads.
We'll also discuss playing the long game.
- Short-term profit does not create long-term value
- Three reasons short-term opportunities are inferior
- Risk-based returns
- Compounding capital growth
Links and Resources:
Stuart’s Book – Rules of the Lending Game & Investopoly
Some of our favourite quotes from the show:
“Of the properties on the market at the moment, in my mind, there’s probably less than 5% that I would class as investment-grade.” – Michael Yardney
“Even when you buy a home, for most people it’s not their final home. It’s not their forever home, so they should still think like an investor.” – Michael Yardney
“Enjoy the journey, because if you don’t enjoy the journey, you’re not going to appreciate the destination when you get there.” – Michael Yardney
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