The Unicorn of Property Investment
When it comes to investing in property we all want a property in a fantastic location, close to facilities and transport, in great condition that won’t require a lot of maintenance. We want it to appeal to tenants, have phenomenal capital growth, high rental yield and we want it at a bargain price….right??
The problem with this property is that it doesn’t really exist, it’s the unicorn of property. At some point in the journey, hopefully early on, you must work out what aspects of your criteria are the priority and be prepared to compromise on others. This is the sign of a mature investor and recognising this will save you a lot of time and frustration!
When it comes to deciding what you are prepared to compromise on, here are three tips I’d like to share:
- Your budget will have a lot to do with what you can buy – Sounds obvious, doesn’t it! If you have the flexibility to be able to increase your budget, then great! The truth is, however, if you have a fixed budget, then you may want a lot of things but you will have no option but to compromise. When your budget is fixed then you can choose to compromise on land size, the condition and features of the property or the suburbs you can buy in. Tweaking one or more of these things may just bring you back on track.
- Always keep in mind the driving factor for the purchase – Sometimes I see novice investors getting more caught up on a ‘pretty house’ than on a good investment. To me, the location of the property is more important than the appearance of the house. Not to say I don’t want a good looking property with street appeal and tenant appeal, it’s more that if I have to choose between a cracking location with a slightly older or less renovated property then I’d choose this before I chose a lovely renovated property in the middle of nowhere! Determine what your ‘driving factor’ is for the purchase, are you going for growth or yield (I know, I know, we all want both!). If you dig hard enough and ask the right questions then you’ll work out what your driving factor is. Keep this in mind with all purchase decisions, don’t get caught up in the shiny objects!
- Don’t get hung up on insignificant issues – Ceiling fans, air conditioner, built in robes, ugly paint colours, ugly front fence…all these things or a lack of these things are fixable items. Don’t get hung up on these issues, they’re insignificant and make the difference between a property being a good investment and not being a good investment. This point brings us back to the previous tip – keep your eye on the ball!
If you need help working out what you can achieve within your investment budget, give us a call at Property Zest!