Young. Getting into Property investing? advice?

Congratulations on deciding to invest.

There are many options, strategies, markets and more importantly; your goals. Are you looking for cap growth only or are you after cashflow as well? They don’t always go together, but the more experience you have, the better you will get at combining the two.

Once you know what you want the areas will start to appear before you as to where to buy, what type of property to buy – are you looking to reno, subdivide, do you want to buy newer, or maybe units or townhouses?

Gathering data and doing research can be done a number of ways;
Forums like this,
Investment magazines and newspapers (treat printed materials with a healthy scepticism as they have agendas).
Talk to lots of agents in your target areas (treat as above).
Visit the area by foot, car, internet and study things like rental returns, vacancy rates, past sales figures.
Talk to local councils, look for suburb profiles – some are free on the internet, ABS or you can pay for info from Residex and sites similar to this.

The due diligence part takes a lot of time, but is worth it when you find the deal.

Establishing a criteria for you will help you save time when selecting potential properties; if the property doesn’t fit the criteria after a few basic checks you move on to the next one. Without this, or some sort of selection system, you will find you will be looking aimlessly and never be able to make a decision.

Cheers,
Marc.
[email protected]

“we get sent lemons; it’s up to us to make lemonade”

Due Diligence is the part where you have to get into checking out all the aspects of your proposed investment. it involves lots of time in the car, on foot, on the internet, on the phone to agents, councils etc. Not a lot of fun, but necessary to make the investment a success. You are trying to find out the truth about the area, the property, the dangers pros and cons.

Before you can start you need to establish your own criteria for what makes a good investment. Some people only want cap growth; some only cashflow; some both.

The cap growth investor would be looking at things like property prices – can they buy below market to increase equity instantly? Is the population increasing in the area which will create more demand? Is the property supply limited which further fuels the demand? What are the employment factors like- is there good opportunity for long-term employment? Can the property be improved/subdivided/renovated to add value? Are there plans by council or local/state govt to improve infrastructure such as schools etc?

The cashflow investor wants to know about rents – is there good demand? Are the returns good enough? Is there good depreciation for better tax claims? Can they buy under market to improve returns? Finance/management/holding costs are important. Can you add value to increase rents?

The cashflow/cap growth investor wants to know about all of the above and combine all things or many of the factors before deciding on a purchase.

Cheers,
Marc.
[email protected]

“we get sent lemons; it’s up to us to make lemonade”