We have set up a lot of clients with investment properties and property management in Perth. Along the way, we have worked with a lot of investors and a lot of different financial situations. During that time, we have learned what works and what doesn’t. To make a long story short, what works is research.
Too many investors depend on blind luck or “can’t miss” advice given by well-meaning but ill-prepared friends, relatives, or business acquaintances. Sadly, most of these “can’t miss opportunities” turn out to be one-way tickets to financial oblivion. For every person who gets lucky and “hits the jackpot,” 10 more lose a lot of money.
The first part of your research should be to define why you are investing and what you want to gain from your investments properties. The simple answer, of course, is, “That’s easy: I just want to make money.” However, if you want to invest like a professional instead of an amateur, you must drill past the superficial.
First, ask yourself why you are investing. Do you want your profits on the back end as capital gains, or do you need immediate positive cash flow? How much money can you afford to invest?
What is your exit strategy? How do you intend to realise your profits on this investment? Do you want your profits in the form of rental income and immediate equity, or do you want to invest in the property short term, “flip” or resell the property, and use the profits for your next investment? Sometimes speed and market dexterity can keep your profits from being consumed by interest.
What are the current buyer trends? What kind of properties are selling fast and turning profit? Do buyers want more bedrooms or more living space? Do they want a courtyard or a backyard? We recommend specialising in one or two suburbs and knowing everything about the local market.
Where will the market be in 12 months? Where will it be in 24 months? If you do your research correctly, you can make a series of educated guesses based on where the market is likely to go. This will give you the “investor’s edge” and help you surpass those who are still plodding along in the “middle of the road.”