Recommendations for a Young Property Investor
Let me start by deflating your ambitions but do not worry I will wrap it up the right way. So the deflating bit- If you are at a tender age, the property market might not be for you at all. You can be better off investing your money in shares and managed funds. And now about the “wrapping up right” bit- I have come to understand that the best goals are set and best decisions are made at an unripe age. So there you go!
If you are at a tender age for investments
If you are young and the property bug has bitten you, there are definitely few steps you will do well to keep in mind. I call it the learner’s curve for a property investor.
Beautiful and investment-grade properties are not the same
Remember that a property worth living in and one worth investing in are not ideally the same. Capital growth and ‘good looks’ are two different things. Investment-grade properties are those which offer a strong scaffolding of rental yield and capital gains. These are the properties which may give you a good positive cash flow through rental returns or pay you handsomely during sale through their assigned capital growth.
For all you know, such properties may not be beautiful to look at- like the property you just sold your heart to. No issues! Just keep in mind that buying to invest and buying to live are as different as chalk and cheese.
Is property your ideal class of investments?
You will also be better placed by honestly figuring out if property is ‘your’ investment class. Let me elaborate. Irrespective of how hard you try youth cannot be arrested in cells of discipline. There are lifestyle-changes aplenty and there are those freaking bouts of madness, socialising, partying out, overambitious drills, time for creative leg-space and the general run of “I am going to change the world” ideas which you will have to battle.
This does not leave much space to pursue something as disciplined as real estate. To reiterate, investment classes like managed funds and term deposits can be your better bets.
If you are disciplined enough…
If you are ready to surmount obstacles flying thick and fast, you are perhaps disciplined enough to undertake the grind and be a property investor. If such is the case, your next step is to learn about the investment routines. For instance, it is imperative to conduct research on your investment neighbourhood. You have got to track the comparable sales figure to find out what price properties usually sell there at?
Learn the ropes of research
It is equally important to find out the historical capital growth data and whether rental yield graph has shown a decline or a hike. You have got to siphon off information from body corporate and local councils whether the area you have chosen has been selected for town planning initiatives or has undergone any typical or atypical zoning restriction in the recent past.
This research will ground you in the world of real estate. Of course, there will be million further miles to travel but how well you negotiate this first patch will determine the chances of your future success.
If you are new to the game and require the help of a seasoned buyer’s agent, you can give me a call.