Capital Growth

10 Reasons to Buy your First Investment Property

One. 2009 is a good time to buy for a cashed buyer – It’s 2009 and there is a global recession, there is no shortage of foreclosures, or mortgagee sales. Get hunting for bargains. As fewer people can afford to buy, as times are hard, there are more people looking to rent, which drives up rent.

Two. You can share the risk, and cost – You can make fairly small investments if you share with others, however your return will still be equal to your percentage of ownership, and the overall gain in value of the property.

Three. You are in control – The performance of any investment is not guaranteed, however, a bricks and mortar investment may provide you greater control than other assets.

Four. Capital growth – Investing your money in the bank will not make you any capital growth. It may hold it’s value and be safe, however when you take inflation into consideration, you stand to gain very little. However, with property investment, the value of your property will almost certainly increase over time. This capital growth becomes your profit.

Five. Taxation benefits – There are many tax benefits in owning property, and in some countries more than others. Benefits come in the form of claiming against depreciating buildings, or negative gearing your investment to claim back tax on other income.

Six. Property makes millionaires – More millionaires have been created through property than any other form of investment. Property millionaires’ have been created at a rate of more than 58,000 a year since 2001. By 2010, there will be around three quarter of a million millionaires through rises in property prices.

Seven – Anyone can do it – You don’t require any degree or training, however, I suggest doing a fair bit of reading and seeking advice.

Eight. Property Investments provide Security, Houses don’t go broke – You can still loose money in a property investment, particularly if you have a rental void, or if you have to make a short sale. However, when compared to the stock market, where you are investing companies, property seems secure.

Nine. You can buy it with someone else’s money – Property investment gives you the ability to leverage other people money, and profit from it. Sure the bank will charge to a nice interest rate to lend you money, however the best part is the banks don’t share in the capital growth of the property, this increased equity will be all yours.

Ten. You can add value – You can add value to your investment by renovating or refurbishing your properties. Ensure that you are not over investing in the wrong property though, some areas and markets have a ceiling price.

It’s a great time to invest in property if you have the money, just make sure you seek professional advice, and do some reading.

Capital Growth

Choosing Property Investment Locations

Location Location location

When investing in property location is one of your key factors to consider. Researching your location, and ensuring you are making a good purchasing decision can be the difference between purchasing a great investment, or ending up with a lemon. So when looking at locations what are the main considerations:

Rental Potential

The rental potential of a property is always going to add to the value. A house may be run down, and lack any street appeal, but if it is in an area of high rental demand, there is a good chance that it will still be a sound investment. Areas that typically have high rental demand would include places close to tertiary institutes and universities, students may not make the best tenants, but there is never a shortage in demand. Any where close to large employers. Hospitals are a good example. Places of convince, close to CBD’s or to key services such as public transport. Ask your self the question: “Who would live here?”

Desirable Locations

Certain locations are always going to be desirable. Beach front property, or property with an outstanding view, areas in big city CBD’s. Places like this sell at a premium, but they also hold their value, and if the market moves up, so does the value of your investment.

Emerging Suburbs

If there is investment going into other properties, or public amenities in an area, it is a good sign of growth in that area. If property developer has decided to build a new apartment block there, it is a good sign that there is demand. Keep you ears close to the ground and look for emerging areas of town.

Historical Areas of Capital Growth

Depending on where you live you may be able to get access to sales figures of areas around town. Look for areas that show a pattern of historical growth. Which suburbs have always been a good place to buy, chances are they will continue to be a good investment.

Know / find someone who lives in the area

You can normally get a good idea on an area by talking to someone that loves there. Are they happy, or are they always talking about wanting to move. If people don’t like living in an area it’s not likely to be a good investment.

Right place on the right street

Even having selected a good suburb to buy in isn’t the whole decision, you need to buy the right house on the right street. You might have heard the saying “buy the worst house on the best street.” If you are not planning on spending money on the property this may not hold true.

What to avoid – In general tenets dislike living close to:

• busy roads
• train lines
• airports
• next to schools
• industrial parks
• large powerlines or cell phone towers
• public toilets
• places that have large buildings blocking any view
• under common flight paths
• large venues where there will be late night sports or concerts