Finding Great Investment Properties
A great investment property can be for either capital growth or positive cash
flow. These are the only two things you would buy and investment property for;
otherwise you aren’t buying an investment. A positive cash flow property will
generally have lower capital growth, but it pays for itself. The right
negatively geared property will have great capital growth and will make you a
lot of money in the long term.
Finding the great investment property depends on which one you are looking for.
If you are looking for a positively geared property then these are some of the
things you may want to look for. Mining towns generally offer great positively
geared properties, but be warned these properties could also become worthless
overnight if the entire town is purely there for the mine. Properties close to
universities or the CBD (central business district) are also great as they will
attract high rents, but would generally be more expensive because of this.
If you are looking for great capital growth, then this can become more of
guessing game than science. The best places to start looking are at suburbs that
have not moved very much in price over the last 10 years. Property always goes
up in value and sometimes suburbs can lag behind in growth, but they must
eventually catch up. If someone says, don’t buy property here the prices haven’t
moved in 10 yrs, then I would quickly start doing your research on that
location.
Look at proposed freeways/motorways/highways and train/tram lines. These can add
or detract value from a home. If a train line is coming that way and will be 5
minutes walk from that house, it will most likely experience a higher growth
rate. If however the train line is going to be built right behind the backyard
fence it may be best to reconsider
Shopping Centres, community centres or schools planned for your area will add
great growth to your property. If there is a school planned to be built in the
next few years in the suburb it would be good to look at 4x2 houses close to the
proposed school site. Make sure the property fits what you are planning for. A
3x1 will not likely have as much growth near a school as it is too small for
families. A 3x1 by a university or a train line will gain more as it will be
bought or sought after by young couples or singles looking to be close to uni or
transportation.
There are many things that can send the price of a property rising over time.
Remember buying an investment property is a long term plan and therefore best to
look at what is to come in the area. The government generally plans road and
rail extensions decades in advance, so it’s always great to know what will
happen, to benefit from it.