10 Things To Take Into Consideration When Buying A Property
As property investors and home-owners at Real Asset Property Group, we are inspired by the quote from Warren Buffet “Be fearful when others are greedy and be greedy when others are fearful.”
Sometimes the best time to act is the time when there is uncertainty in the property market because this is when most people will sit on their hands rather than be proactive and take action when they should.
A seasoned property investor knows that the best time to buy is when the market is down and the best time to sell is never or again in the words of Warren Buffet “our favourite holding period is forever.” This is what you should consider as your property strategy as we move into 2019.
Indicators in the market place, such as greater leniency in lending from the banks and a wider range of investor packages coming through for property investors, show that 2019 could bring about greater stability in real estate across the board.
Due to fewer property investors buying in the market right now, there is starting to be more pressure put on rental amounts which in turn can result in a higher yield, which means it might be a good time to buy now before the market does start bouncing back.
The advice we have received from a number of finance professionals for property investors is to consider areas where you are likely to get a higher yield, as this may be a strong consideration from the banks when they are evaluating your loan application in this changing market.
As an investor, it is important to know what you need to study when deciding whether or not to buy a property:
- What is the current tenancy vacancy rate for the area and how do they vary throughout the year?
- What sort of rental returns does the area command?
- What is the percentage ratio of owner-occupiers to tenants?
- Consider the level of current and future residential developments in the area.
- Investigate any future infrastructure initiatives for the area ie/ schools, shopping centres & transport upgrades
- Understand the demand and type of properties that are preferred in an area for tenants.
- Does the property need updating, if so and if you do the updates is it likely to increase your rental amount or not make a difference, based on the demographic of the area?
- Assess the sales turnover for the area and how the market has performed over the short term and the longer term.
- Look at the outgoings of a property and the effect it will have on your return.
- Study the trends of the area in terms of who is moving in and out of the area. ie/ occupation types, income levels and age groups.
Keep in mind, these are only ten items of consideration and while there can be many more, the most important thing is to do your research and know what you are buying and what you want to achieve from the property.