The Great Property Debate
There is a lot of debate in the investing world about whether it is better to buy cheap properties or expensive properties. Some people believe that you should only invest in high-value property, while others think that buying cheap property can be more profitable. So which investing strategy is better?
In this blog post, we will explore both sides of the argument and try to come to a conclusion.
Those who advocate for investing in expensive property argue that you are more likely to make a profit. They point to the fact that expensive property is usually located in desirable areas, which means that there will always be people who are willing to pay top dollar for it. Additionally, expensive property is usually built to a higher standard than cheap property, which means that it is more likely to appreciate in value over time.
On the other hand, those who believe that cheap property is a better investment argue that you can get more bang for your buck. They claim that with cheap property, you are more likely to see a higher return on investment because you can put more money into fixing it up and making it nicer. Additionally, they say that cheap property is often located in areas that are up-and-coming, which means that the value of the property is likely to increase over time.
Anyone looking to invest in property should be aware that cheap does not always mean good value. There are a number of reasons why a property might be cheap, and these can often lead to problems further down the line.
The Pitfalls of Cheap Properties
While cheap properties can be lucrative, it’s crucial to be cautious:
- Hidden Costs: Cheap properties may require significant repairs and maintenance, eroding potential profits.
- Vacancy Risks: Less desirable locations or property conditions can lead to longer vacancy periods.
- Limited Appreciation: Properties in declining areas may struggle to appreciate in value.
For example, rents may never go up, and in some cases may even decrease. This can leave you out of pocket and struggling to make ends meet. Similarly, cheap properties may never perform well in terms of capital growth.
This means that you could end up losing money on your investment, rather than seeing it grow over time. Finally, cheap properties can often be vacant for long periods of time, costing you hundreds or even thousands of dollars in lost rent. As a result, it is important to do your research and only invest in properties that offer good value for money. After all, with the right strategies and tools at your disposal, there is no reason why your investment property should not succeed!
That’s why it’s so important to use data analytics, trends and statistics when choosing an investment property. By doing your research, you can be sure that you’re making a wise investment that will provide you with value in the long run. So, don’t be afraid to spend a little extra on your next property purchase – it could end up being the best decision you ever make.
Key Factors to Consider:
When looking for value properties there are many factors you need to look for. When evaluating property investments, consider these factors:
Should I buy a property below market value or at market value?
You want to find a property that is under market value or at market value. It’s not always reasonable to think in a Hot market you will find a property that is ‘under market value’. This can be found by looking at comparable sales in the area or by working with a real estate agent who is familiar with value properties.
Is there high demand for rental properties in the area?
You want to look for low suburb vacancy rates. This will ensure that there is a high demand for rental properties in the area and that your property will be rented out quickly. It will also help to ensure that you get a higher rental return as well as your property not being vacant for longer periods of time which can be costly.
Are there more owner-occupied homes or rental properties in the area?
You want to look for a low % of renters in the market. This indicates that there are more owner-occupied properties in the area and that the demand for rentals is high. You want to look for an area with a high percentage of owner-occupied properties. This indicates that the area is stable and that property values are likely to increase. 1st home buyers and owner-occupiers generally increase the value of the properties as they buy emotionally whereas investors by figure based so generally offer under market value.
Are there good schools, parks, and public transport nearby?
You want to look for local infrastructure and amenities. This includes things like schools, parks, and public transportation.
Are there good schools, parks, and public transport nearby?
You want to look for proximity to transport and employment hubs. This will make it easy for tenants to get to and from work and make it easier for you to find tenants.
Will there be new developments in the area soon?
You want to look for development approvals. This means that there are plans for new development in the area, you want this number as low as possible as this will ensure that your property will increase in value over time.
Are there any historical buildings or landmarks that might affect the property?
You want to consider heritage considerations. This can include things like historical buildings or landmarks in the area.
Is the population growing in the area?
You want to look for an area with a high population growth %. This means that there are more people looking for properties in that location and that there will be a higher demand for rental properties.
Are people interested in buying properties in this area?
High online search interest and low days on market. This means that there are more people searching for properties in the area and that properties are selling quickly.
Finally, you want to consult with a property management company. They will be able to tell you what type of property is in demand in the area and what kind of property is likely to perform well. Property Advisors will also be able to advise you on the demographics of the area and what type of tenant is likely to be looking for a property in that location.
Beyond the Basics: Hidden Factors in Property Investment
While traditional factors like location, price, and rental yield are crucial, it’s essential to delve deeper into potential risks and opportunities. Here are some often-overlooked aspects to consider:
Environmental Risks:
- Flood Zones: Are there risks of flooding, especially during extreme weather events?
- Fire Zones: Could the property be susceptible to wildfires or other fire hazards?
There are also other factors to consider whether or not they are Heritage listed, in a Flood Zone, Fire Zones, Ease of rezoning for future development and DA approvals. These are checks and balances that you want to put in place when looking for a property. The risk of a property being in a fire zone is that if there were to be a fire, your property could be at risk. Whereas, if the property is in a flood zone, there is a risk that the property could be flooded.
That’s why it’s so important to use data analytics, trends and statistics when choosing an investment property. By doing your research, you can be sure that you’re making a wise investment that will provide you with value in the long run. The factors above are only a small portion of what you need to consider when looking for an investment property. However, if you keep these factors in mind, you’ll be well on your way to finding a property that will provide you with value.
What’s the point of investing in real estate if it doesn’t offer true value? If you want your investment to be worthwhile, consider purchasing a regional property rather than Blue chips that you think you know. Investment Grade properties have been proven time and again as being more profitable over long periods for those who know what they’re doing – making them an exceptional choice when compared with cheap options or guesses!
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Contact Wealth Through Property today to learn how we can help you achieve your investment goals.
Thank you for reading! We hope this blog post has helped to open your eyes to the possibilities that come with using a buyers agent. Not only will they help you secure an investment-grade property, but they can also save you time and money in the process. If you have any questions or would like more information on how Wealth Through Property can assist you, please don’t hesitate to comment below or contact us directly. We look forward to hearing from you soon!
