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16 June 2017

Choosing the Right Long Term Investment

Learning about buying property can be a monster task in itself, and even more so if you are looking for an investment property. Knowing the right investment strategy for your future is the first step—and if you decide that you want a long-term growth investment then we have some tips for you.

1. Large Block
The most important choice when wanting long-term growth is to choose a property that sits on a larger block but still not too far from the inner city. The size of the block is the most important factor because as the years go by the land in your area will grow more scarce and increase the value in your property. Try not to let emotions in at this stage, where it can often be better to buy a larger lot with an ugly or old house on it than to buy something smaller with a brand new house.

Why you ask? Because that new house will not be new in 20 years when you plan to sell and will have devalued—whereas your land will have continued to increase in price year on year.

2. Lots of Bedrooms
The next most important factor is to choose a property with lots of bedrooms. A 3 bedroom house will always sell for more than a 2 bedroom house. And this gives you a good opportunity to be creative—can that study or dining room be turned into an extra bedroom? That’s easy money. Buying a large property also leads into our next point.

3. Buy Houses, not Units
Houses are far more likely to hold their value over time. Additionally, houses are often on larger blocks. By purchasing a unit, you are buying land that is already divided into its smallest blocks which doesn’t leave lots of value for you as an investor. In some states, buying a larger block with a house on it can also allow you to build a granny flat in the backyard as an extra source of income while holding your property. But bear in mind, building the granny flat is unlikely to drastically increase the price of the property. This is an income-generating strategy if that’s what you will need for your own portfolio.

4. Middle of the Market
When it comes to finally selling your property, your success will depend on how well the property fits many peoples needs and how many buyers are in your price range. If you have chosen a large block with a house, you have already checked the first box. To ensure that you have quick sale, try to choose a property that fits somewhere around the middle of the market. This strategy will bring you lots of potential buyers which gives you a strong place to negotiate the final price from.

Buying a long-term growth property doesn’t suit everyone’s investment strategy, but if that’s what you are going for then the above advice will suit you well. The biggest trap is thinking that if you buy an old property now it will be so old in 20 years no one will want it. While this may reduce the amount of potential buyers, you will lose out by purchasing a new property now and hoping it will retain its value. Look for a large block with a house on it having multiple bedrooms and you will have a solid foundation for your investment portfolio.

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