I understand navigating the real estate maze isn’t easy, as investing in property has many potential pitfalls. So to help you crack the investor code, I’m going to share with you some hints and tips for investing like a pro. Here’s my top tips:
1. Put your detective hat on. If you’re looking to sell your property after a short period of time, there’s no point buying in a topped out suburb. Instead, discover the growth potential of the different suburbs in your area by using search engines like Australian Property Monitors. You could also consider buying in the neighbouring suburbs of a topped out area, to get in early before prices go up. Keep in mind, property booms don’t happen every year, so it’s important to evaluate your potential for profit by looking at the current property prices in the market.
2. Decide how much you’re willing to spend. A general rule of thumb is to stick to the mid-range of the suburb’s pricing to maximise your potential buyer pool, compared to low or high-range property prices that will end up limiting the amount of available buyers for your property when it comes time to sell. Beware of an unusually low price tag, which could be a big warning sign that there’s something wrong with the property.
3. Consider your financial situation. In the pre-purchase stage ensure your finances are in order and get a pre-approval commitment from the bank before you go ahead. Search for a competitive deal in Mozo’s home loan section here, know how much you can afford to buy and factor in your repayments once building has commenced.
4. Place the property under the microscope. Once you’re fully satisfied with the suburb, its growth potential and have your finances in order take a closer look at the property itself and make sure you know the end value before you start the reno. Purchasing to flip is a risky business, as the wrong choice could cost you big bucks and may become a flipping flop if your reno is more expensive than expected and you run out of money. So make sure you get a builder’s inspection to ensure the foundation and structure are sound and wriggle out any underlying issues that could potentially hurt your hip pocket.
5. Be a commitaphobe until you find the right property. While purchasing a property to fix up and resell can be an exciting endeavour, don’t rush into making a commitment. Consider how you will add value to the property and only make the decision when you have a clear plan. My tips for boosting value include adding a new bedroom by reconfiguring the floor space, giving the kitchen a refresh, extending the master bedroom and adding parking. Discover more great renovation ideas here.
6. Consider properties with the potential to add more. There’s plenty of ways to add more to a property, it’s just about finding the right projects for you and your investment property. Those with a large budget could buy a shabby old house and replace it with a pair of modern semis or add a granny flat with rear lane access to increase your rental yields.
7. Make a profit without physically renovating. You could potentially make money on your investment property without undertaking the physical renovation by organising the approval for DA plans. However this requires plenty of planning to successfully flip and make a profit, so remember to check with the council or a town planner about the property to find out if there are any zoning requirements, also factor in fees from the council and Sydney Water.