Editor's Note: August 2014

The heart of the matter

The difference between buying a home to live in and buying a property purely for investment purposes is heart.

You see, when you’re looking for your next place to call home, then your heart is always involved.

It might be that you want to live in a certain location because it tugs at your heartstrings for a variety of reasons, perhaps including its abundance of very cool coffee shops.

Or you might want to live somewhere because it’s close to your mum and dad, your friends, or because it has the best schools to ensure your daughter receives the right education to become prime minister.

All, or any of these factors, means you’ll often make your owner-occupier buying decisions based on heart – and hopefully facts and research too, especially if you’re a reader of this magazine.

But when you’re buying as an investor, you’re in big trouble if you let your heart rule your head. You need to know your numbers, your risk appetite, and you need to have an understanding of your long-term property strategy. And, of course, it’s always a good idea to start with the end in mind.

Plus you should have a solid understanding of all the parts of Australia based on past performances and data projections. And finally you need the ability to perhaps buy out of your comfortable zone, which is generally outside of your local patch.

As an investor there’s also the city versus country conundrum (page 22), and knowing the cash cow hotspots (page 74) plus there’s also places, perhaps not far from where you live right now, that can provide yields of gold (page 38).

We’ve found there’s a misconception that buying a property in a metropolitan area can sometimes mean compromising on the rental yield. But it doesn’t always have to be that way.

In this issue of Australian Property Investor, we’ve found 90 metro suburbs with sparkly yields of six per cent or more to help you make your next strategic investment move. Those are heady, and very useful, numbers right there.

For many investors these areas create a win-win situation – on the one hand, the rent easily covers mortgage repayments and in some cases it can make it cash flow positive. And on the other hand, capital growth is a relatively safe prospect so investors don’t have to gamble on the fortunes of a risky mining town or regional location. Some of the suburbs may be a little ‘ugly duckling’, but if you’re looking for an affordable investment you might also uncover golden yields at the same time.

Until next month then, wise (and head over heart) property investing. 

Nicola McDougall

Nicola McDougall