While there’s no magic formula for property-investment success, experts agree that most of us can do well if we educate ourselves. ‘There are certain fundamentals that apply to property investment regardless of where you are in the world,’ says Richard Crabb, managing director of the Aspire Property Advisor Network.
According to Crabb, properties that fulfil the following five criteria are more likely to deliver capital gains over the long term.
1. The location is popular with owner-occupiers
Some investors search for properties in locations where there is strong rental demand – after all, the primary way to derive income from an investment property is to rent it out. But Crabb says the smarter move is to look for locations with high percentages of owner-occupiers. ‘These are the suburbs where property values are most likely to increase over time, because people want to live there for the long term,’ he says.
2. The location is amenity-rich
A suburb’s reputation and socio-economic profile counts for a lot, says Crabb. ‘But you also want to look for locations with plenty of practical reasons to live there, whether that’s amenities, infrastructure or accessibility to nearby areas such as the CBD.’ He says suburbs that are rich in amenities are more likely to hold their value over time, even if their socio-economic profile changes or the broader market suffers a downturn.
3. The builder and/or developer is established
When you invest in the stock market, betting on fledgling companies often makes sense: you can buy low and, hopefully, sell high. But the same doesn’t apply to real-estate development, says Crabb. ‘Going with a company that’s not as well-known and doesn’t have a history carries a higher risk of poor quality, which can make your asset literally un-sellable.’ If you’re buying a new build, you should do your research thoroughly. ‘Research the developer’s previous work; go and visit it in person, if possible.’
4. The fixtures and fittings are of a high quality
Crabb says fixtures and fittings are a good way to gauge the overall quality of new-build construction because they demonstrate how much care the developer has put into the project. ‘A good example is the kitchen benchtop,’ he says: ‘I always look for a stone benchtop. If it’s a laminate benchtop, it just screams ‘cheap’. Another one is the quality of the appliances: are they made by some no-name brand or by a well-known, high-quality brand?’
5. There is plenty of available information
‘Don’t be sucked in by a glossy brochure,’ says Crabb. ‘What you really want to see is the detail.’ That means seeking out property listings with plenty of facts and figures, plus information about the builder and developer. The more information a seller is willing to provide from the outset, the better, says Crabb.
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