Is now the time to invest in property?
After a healthy year in 2013, many are predicting 2014 to be another great year for investors. But come December 31 2014, will the promises and the potential align?
The key is to pick property that is going to rise in value as opposed to following the crowd into something that has already risen. This often leads investors back to what can be described as unfashionable investments. But unfashionable or out of favour investments is often where the best gains can be made.
2013 was a stellar year for Sydney. Many commentators have picked it to repeat the performance in 2014 too. Maybe it will, maybe it won’t.
In order to select the right investment property, it’s imperative to follow key data as opposed to sentiment. Following sentiment may result in a successful investment. But just like the stock market, once you read about it in the news, the value is already gone. The Sydney housing market was out of favour with investors from 2010 to early 2013, which ironically is when the market showed the most value for investors. Now, Sydney is back in favour and suddenly prices look expensive.
To help you select the right investment property at the right time, follow some simple do’s and don’ts
Do’s
Do focus on the net yield as opposed to the gross yield.
Do look for locations that have not yet boomed.
Do consider commercial property with a secure tenant.
Do consider employment and infrastructure in the immediate locale.
Do remember you are buying an investment and not an alternative home.
Do take a 20 year view to the respective investment property.
Do budget for interest rates rises.
Do remain patient during your search.
Don’t
Don’t take emotional home buyers on in a price war.
Don’t buy an investment property solely because it offers tax concessions.
Don’t buy a lifestyle property as an investment.
Don’t view the salesperson as an independent advisor on the merits of a property they are selling.
Don’t try to nab a bargain, you will probably end up with a lemon instead.
Don’t try to get rich quick from property investment.
Don’t buy just for capital growth, focus on the yield.
Don’t take property advice from whiz kids who have never seen a downturn.
It’s near impossible to get rich quickly through property investment. It’s frighteningly easy to go broke quickly though, particularly if you are speculating in a bull market. Stay calm, stay alert and stay grounded.