When times are good, property investment seems easy. But it is only a reliable, tax-effective way to create wealth if it’s done correctly. So what is the right property type? It’s an easy question to ask, but a complex question to answer.
For either residential or commercial asset classes the old adage “location, location, location” rings true. Irrespective of the type of real estate asset an investor purchases, it should be strategically located. It should be in close proximity to the infrastructure and services required by potential tenants or future purchasers such as schools, employment, transport and recreational or entertainment precincts.
Furthermore, property investors should consider the development potential of both the site and the building in instances where the current use ceases to be viable. This includes assessing zoning restrictions that govern a site’s best use to evaluate future options.
Importantly, land value can comprise up to 70 per cent of the value of a property and is a fundamental factor in determining capital growth. The rate of capital growth, however, can be limited by many factors including block size, aspect, topography and layout – all factors that should be taken into consideration when buying any property.
Another helpful tip to consider when buying for investment purposes is to avoid purchasing property well above a suburb’s median price. The median represents the general level of affordability for the majority of buyers and renters in a specific area and adherence to this buying strategy will give an investor’s real estate asset the widest marketability.
There are many more factors that influence a property’s investment profile that buyers should be aware of before selecting the investment property that is right for them. But having the right guidance and advice now can put investors a step closer to their future goal of financial security.
Greville Pabst is chief executive of WBP Residential Advice – www.wbpproperty.com
