Supply and demand says inner beats outer
Published on 24/02/2013
LOOKING TO BUY AN INVESTMENT PROPERTY BUT NOT SURE WHERE TO LOOK? HERE ARE FIVE TIPS TO HELP YOU MAXIMISE YOUR RETURNS.
1 Look in the inner city rather than the outer suburbs. "Properties close to the CBD are in shorter supply than those in the middle and outer-ring locations, so they'll always be in demand," says Melissa Opie, managing director of Keyhole Property Investments. She advises that in terms of long-term capital growth, someone who has, say $700,000, to invest is better off buying one good-quality property in an inner suburb than two $350,000 properties elsewhere.
2 Ensure the house is located close - but not too close - to lifestyle amenities. "Zone in on areas that are well served by private and public transport infrastructure, close to village-like shopping strips, and with easy access to good schools and hospitals," says Richard Wakelin, a director with Wakelin Property Advisory. "These areas are always in high demand from buyers and renters - your customers - alike".
3 Don't be afraid of buying something that needs a little work. Capital value can be "manufactured" through refurbishment, renovation or redevelopment, says Michael Yardney, founder of Metropole Property Strategists. This may mean sprucing up a kitchen or putting in some airconditioning. But the advice comes with a caveat. Mr Yardney suggests, as a general rule of thumb, spending about 10 per cent of the property's value on renovations, adding that the big challenge for home buyers is to ensure they do not overcapitalise.
4Buy something that stands out from the crowd. "Stick with scarce assets that aren't being built any more," Mr Wakelin says. This includes houses constructed in in-demand period styles such as Victorian, Edwardian and art deco. He adds that people should avoid buying off-the plan McMansions on the city fringe. "There is no scarcity of supply for these properties." Mr Yardney says when it comes to investment, he looks for property "with a twist ... something unique, or special, or different or scarce about the property".
5Suburbs and streetscapes that offer a sense of architectural consistency are generally more in demand than those that do not. "Suburbs with a melting pot of styles - from fibro shacks to 1960s brick veneers and the '90s McMansions - will never hold their value as well as areas with predominantly classic architecture styles such as Federation, Californian bungalows, Victorians [and] art deco," Ms Opie says. Finally, investors are advised to avoid buying near industrial sites.
TIPS FOR BUYING AN APARTMENT
Buy in a block with an active owners corporation to ensure the property is well kept.
Small is OK but layout is important. Make sure, for example, that in a one-bedroom apartment the bathroom can be entered without going into the bedroom.
An outdoor component such as a courtyard is essential.
Avoid locations close to parking or rubbish bin areas.
Be cautious with regard to off-the-plan or brand-new. Established apartments may hold their value better.
Off-street parking is a must.