Myth - I can never lose money if I buy property”
Published on 21/01/2012
Buying a property does not automatically guarantee you financial success. Poorly chosen properties can either limp along in terms of capital growth or, sometimes, go backwards, particularly when you consider the extras that renovations, maintenance and other holding costs add to the equation.
There are two reasons why people lose money on property: either they purchase in the wrong location or pay too much. That poor purchase decision can hinder future property opportunities because your money is tied up in underperforming assets.
Getting advice can be helpful, but be sure to take the advice of someone who has been successful in property prior to following in their footsteps. It’s much easier to choose the right properties form the start rather than having to offload underperformers later.
When it comes to making a sound property investment it is all about buying the right property at the right price. Do at least three months of research in the market in which you wish to buy. Be wary of hot spotting or “great cash back or guaranteed rent” deals. Look for historical performance rather than future projections of that area and that property type.
Buying in outer suburbs can often be more affordable and appealing to investors. However, I think these areas are affected by too many variables such as poor infrastructure, industry instability and new land developments, making for a nail biting ride that will sooner give you heart failure before capital growth.
Here are a few tips for successful property investing:
- Stick to long-term capital growth properties.
- Buy in “lifestyle” locations (areas with amenities and good infrastructure) close to the CBD or water.
- Buy properties in line with the dominant architectural style of their location. Period properties hold their value better than newer properties.
- When buying units/apartments ensure they are at least 50 square meters in internal size with a logical floor plan and car park on title or by licence agreement.
There are no guarantees in life but it’s hard to lose if you invest in the right properties.
By Melissa Opie AKA “The Property Lady”
Follow me on Twitter www.twitter.com/thepropertylady