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In this video:

0:30 Buy where it’s booming
0:46 Common mistake people make in property investment
0:53 Why hire a property manager
1:40 4 Factors in buying an investment property

Hi, Damien from Integrity here again, and today’s blog video is about Where to Buy.
Mistake number one that property investors make is they buy locally. And that’s okay if you live in a place where the prices are going up, but it’s a really silly idea if the prices aren’t going anywhere and as of the moment, that’s about 95% of the country. My mantra is buy where it’s booming. If you buy where it’s booming your property going to go up in value, you’re going to be able to grab your equity out, and buy more properties, and again, buy them where it’s booming.

You wouldn’t buy shares in a company that’s not going anywhere; why buy shares in a town that’s not going anywhere? And this is problem that people make, they say “I want to buy locally because I want to drive by it every day and make sure the tenant is not trashing it”, and things like that.

Now, the truth is, a well selected property manager is going to do a far better job than you are of managing your property for you. They’re not going to be emotionally attached; they’re not going to have sympathy for tenants who don’t do the right thing. They’re going to hold them to the lease and to the letter of the law, and they’re going to make sure that you as the investor have your asset looked after. If you’ve got a bad property manager get a new one.

Okay, so buy where its booming. This is really a liberating idea. Once you work that out you can go and make yourself a lot of money in property and it’s the reason why probably only 10% of property investors do really well and the rest fail. It’s because only 10% realise they need to go and buy elsewhere.

So, where else should you be buying? Now there’s four factors that I say people should look for when buying investment property, and it’s not the proximity of the bus stop or milk bar, or anything like that. Forget that. When they say “location, location,” they’re not talking about the actual location within the town, really. The location within a town will affect the price of property in relation to other properties, but what you’re looking for is a town that’s going places, and then if one property goes up in value in that town, they all will.

So, what sort of towns are we looking for?

Four factors: look for towns where there is:
• A lack of land
• A lack of skilled labour
• An increase in population And increase in average wages

A lack of land can come from a geographical restriction, like the easiest example is an island or an inner city suburb that’s being built out. It can also come from sort of legal ownership structure, like an aboriginal land claim, mining lease or something else that is constricting the town.

A lack of skilled labour; where there is a lack of skilled labour, the tradies that are there will put their prices up. That in turn will push up the price of building, which in turn will push the market upwards.

Increase in population; real simple supply and demand situation. If you’ve got lots and lots of people arriving in that town, if the town is rapidly expanding, those people will compete against each other for the limited housing that is available.

And increase in average wages; simple again. If you’ve got people coming to town on big salaries, those people are going to have a larger borrowing capacity and would be able to pay more for property and then they will push property prices up as well.

So, in summary:

Where to buy? Buy where it’s booming.

Four factors to look for: lack of land, lack of skilled labour, increase in population, increase in average wages.

Until next time, thanks for joining us, and remember, if you need property coaching and education go to http://propertyinvestmentmentor.com.au – that’s what we do there.

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