Investing in real estate is a strategy to grow wealth. Whether purchasing your first, third or fifth investment property, the same considerations apply:

  • Decide your financial goals such as rental yields or capital growth, maximizing tax deductions through negative gearing or passive income.
  • Be prudent and keep your gearing manageable so you can ride out the good and bad times of market cycles. And yes, there will always be cycles!
  • Be realistic and take a long-term view. The current market has changed for property values, slower annual growth and obtaining investment finance, yet the magic of compounding over long periods remains as valid today for growth assets such as property as it is for shares.
  • Shop around to find the best loan structure for your goals.

And to quote Warren Buffett, “Always stay rational.”

Here are 5 Essential Property Investment Tips to Always Stay Rational

1. Location

Carefully research which suburbs are showing growth and strong demand because choosing a good location will help deliver capital growth in the long run. Study which suburbs are selling and for how much, read online expert analysis, consider neighboring suburbs yet to experience the boom or those experiencing population growth, understand who lives in the suburb (singles, families, retirees) and what infrastructure projects are happening that will improve employment opportunities and lifestyle amenities in the area.

Assess multiple properties and look at proximity to public transport, schools, shops, libraries, parks, restaurants and cafes. Speak to our Coronis sales agents across SEQ, all with detailed local knowledge and experience to estimate potential rental income and the area’s advantages.

2. Apartment or House?

When compared to houses in high demand areas, apartments can be a good investment as they are more affordable with less expenses for upkeep, which usually means a better rental yield. Be wary of areas where there is a significant increase in off the plan apartments for sale as there maybe many rental properties vacant at the same time once these buildings are completed. Calculate thoroughly the ongoing costs of ownership between these various housing choices, including different apartment types. Medium to low density apartments tend to have lower owner’s corporation fees and appeal to tenants and owner-occupiers (for resale value) with better privacy and living quality.

3. Opt for neutral

Choose a property with neutral tones throughout, including the kitchen and bathroom. Tenants will be attracted to properties where they can add their own personal touch. And neutral can be easier for maintenance or repairs over the long term.

4. Don’t panic

What you pay for an investment does matter. Take the emotion out of your decision by not rushing and try to stay calm and objective. Just because friends or family are doing something does not mean it is always good for you to do. So, don’t be afraid to walk away from a particular property.

Another Warren Buffett gem: “A public-opinion poll is no substitute for thought.”

5. Be optimistic

This may appear to contradict Tip 4, but having done the research, you will take greater comfort and be optimistic from knowing what you need to do. The property cycle has shown positive returns with every cycle and for most years out of ten. So, don’t sweat the small stuff and get caught up in every media article and opinion. For every negative opinion, there is often a positive one. Keep your gearing at a manageable level that you can afford, appreciate that properties will always earn rents and feel comfortable taking a long-term approach to property investing.

Property Investment Guide

Understand the ins-and-outs of investing in property and how you can make the right decisions and get the most out of your investment.

Property Investment Guide

Understand the ins-and-outs of investing in property and how you can make the right decisions and get the most out of your investment.

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