Hello, guys, currently I live in my own house (which is fully paid), the house value is about $450,000. my annual salary is $45,000. but I dont have much cash in hands.
I am thinking to take another property for investment. what kind of property should I choose?Here is another question, If I have $700,000, do I buy 2 apartments or 2 small houses or land or commercial property? which one is better for a investor like me?
Thanks in advance
Hello lukelee,
The idea of getting your existing capital moving is a great idea. But classify yourself as a novice investor to start with. As a novice investor you need to get familiar with all possible expenses and costs involved with an investment property. And it really doesnt matter what field you invest in. What you need to be able to do for yourself is justify your reasons for investing in the area to yourself.
Apartments – easy lockup, relatively low mainenance, relatively low cost. DISADVANTAGES depending on the areas concerned you can reach market saturation on apartments over and above a certain amount. Make sure your apartment is likeable within walking distance of communal facilities and transport and you should do ok.
Small Houses? Houses – Best for capital appreciation as they have the additional potential of extra land value. Higher maintenance than apartments and also attract higher council rates. Make sure you have 650+sqm of land .. and try to get a close to square block. Dont go to cul de sac suburbs as they exhibit slow growth, they are cheap to begin with but remain cheap. Unless you plan to develop properties yourself, dont go for properties with plans and permits. The price for that is usually factored in and the permits will expire before a resale takes place.
Commercial property usually provides the best returns at the greatest risk level. It can be several months in between tenants in bad times on commercial properties. As with any property buying in a good and desirable position alleviates this concern.
As we are heading into difficult times, my recommendation would probably be as a novice investor for you to take the path of least friction. Employ a good property manager, do face to face interviews before you go out and employ someone. Monitor whats being done to your properties, keep good records, rental statements, all notices in a dedicated folder or file. Most importantly, and this is the one rule that most people forget : MAKE SURE YOU ARE IN CONTROL OF YOUR PROPERTY. Committees and councils can walk all over people who dont take rights and control of their property. Its a major rule and its the one most forgotten.
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