High-end Properties May Be An Unwise Purchase
Capital cities across Australia are witnessing a reversal in fortunes of rental yield and this may be ample reason why investors should look warily at certain price brackets from here on. Those who have the dough to carry the deals look for the really expensive properties, often missing a crucial component called Due Diligence. If only they would research, they would find that the performance of some of these high-end properties might be nothing but questionable.
Risk exposure little too high with high-end properties
If the suburban markets did a volte-face or exhibited countercyclic tendencies all of a sudden, the risk exposure would be too great for investors dealing in high-end properties. For good reason, the near $1 million mark properties may not be as lucrative an option as those marked at half the price.
While making a purchase, it is only appropriate to gauge the capital growth possibilities and the graph of rental yield over the last months. Do not go for rental yield any less than 5%; something which can so easily happen if your cost of purchase is too high. As a notable aside, an eye on the comparable sales figure is also a must. It gives you a fair idea about how homes are valued by banks and at what price have homes similar in size and quality to your prospective home sold in the recent past.
Buy what you can afford, not a status symbol
In short, if you are an investor, don’t buy the largest investment home you can afford – make sure the property will work for you and not be a status symbol.