The market for investment property in Perth is competitive. One mistake can cost an investor thousands of dollars over the term of a 30-year home loan. There is an old adage that still rings true: “If you fail to plan, you plan to fail.” Nowhere is this more true than property investment, especially in Perth.
Our buyer’s agents recommend that every Perth property investor starts with a solid purchase plan. Here are a few suggestions to get you started.
Goals For You & Each Property
You must have clarity of purpose for your Perth property purchase and how it will help you fulfill your personal goals. Is your focus on capital growth, rental income or a mixture of both. Set a financial goal for both rent and growth and then set a date by which you want to achieve the goal. You should also identify milestones along the way to help keep yourself motivated and on task.
You will need to assess how much you want and how fast you want to get there. Your age and income will play a great part in determining how much risk you want to take.
Defining Your Strategy
You need to make sure this step fits in with your overall goals and what you plan to do with principle place of residence. You also need to look at how active you want to be. Are you willing to devote the time to learn and execute a strategy to add value or do you want to be more passive relying on the market to do well. How do you plan to exit the property, if borrowing money from others or doing a joint venture it is essential to have a clear time frame so you know what you must achieve and by when.
Finance
You must know where you are financially at all times. This includes knowing if you qualify for a loan and knowing your credit rating. You should strongly consider reducing credit card limits and paying off expensive debt.
Then, you should get pre-approval and know exactly what you can borrow. You should also set a financial “buffer” for emergencies or unforeseen obstacles. In other words, you are going to borrow a little bit less than you think you can afford to borrow.
Also think about combining your skills and resources to invest with others, I would never have done my first few deals without joint venturing with my parents and next door neighbours. Always make sure you engage a solicitor to put together proper structure for your purchase with agreements outlining the roles and responsibilities of each party.
Selecting a Top Performing Suburb
Regardless of your strategy and budget, you want to increase your chances for short term capital growth so that you are not hamstrung with being able to afford your next purchase. We do this by referencing state of the art suburb prediction reports to gain an insight into the inner workings and underlying trend in the suburb. We combine this with our knowledge of planned infrastructure, what we know of of the sale and rental market and our observations of changes in the area. Our track record of being able to select top performing suburbs is no guarantee of future success but we can certainly improve your chances for getting good growth.
Analysing Properties
Determine market value, location, land content, development potential, transport, amenities and future prospects for growth. You also want to have an ideal tenant in mind and match physical features such as bedrooms, bathrooms and garage to suit them.
Then, you will want to do research, find a potential list of properties, get an appraisal, negotiate an advantageous price and appoint proactive property management to maximise the income of your Perth property.
Or you can call Investors Edge on 1300 472 427 and let us help you with putting together a Property Success Plan.
