BY BARRIE SWART
Every potential property investor wants to own a piece of real estate that will ensure long-term capital growth, but how exactly do you go about finding it? It may be well worth buying a beachfront property in a sleepy little town and wait for it to boom, but finding the next Paternoster is not as easy as it sounds.
Decide your budget
Firstly, decide how much you can afford to spend and how big the return needs to be for the investment to be worth your while. Chat to a broker and your lender of choice before you even start logging on to shop. Once you have a figure in mind, start phoning estate agents and asking which properties they believe will match your budget and your investment goal (in terms of equity or rental income).
Pick your pocket
Most suburbs have “preferred pockets” in terms of popularity. Suburbs that are popular now will likely spread to surrounding areas, and the less sought after pockets will grow in value. It’s also well worth signing up to sites that track pending building projects – if a school or mall or transportation system is in the works, you may want to start shopping for real estate in the area. It’s important to ask the right questions – what do people prefer to buy or rent in that area? Townhouses, freestanding homes, flats? What is the expected population growth for the area? What are similar dwellings renting and selling for?
Look at the view
Seafront properties will always have value. With beachfront real estate, towns often enjoy a small boom, where after the municipality may become over-zealous and start overselling plots in order to cash in. As the plots lay vacant, the prices drop – and that is the time to buy. A home by the beach also has the added bonus of earning holiday rental income. But short of finding that holiday spot, aim to purchase in an area with easy access to the CBD and major freeways. The more accessible an area is to a major employment hub, the greater the demand will be.
Don’t go straight for the city
Capital cities are pricey investments – land, building costs and professional services are already at a premium, and the competition will be fierce. Instead, look at some outlying areas 1-2 hours’ drive from the city to cut your teeth on. Look for a space that is popular with tourists or undergoing gentrification, where the population is expanding or employment is on the rise, or where retailers have announced they are extending their presence to.
Research, research, research
Set alerts up on online classifieds, follow project development and tender websites, sign up for the local paper and follow the neighborhood watch and police reports. They all contain crucial information that will enable you to follow the infrastructure and the subsequent increase in rental/sales demand.
Look a little deeper
It’s important to look at the undesirable qualities a property has as well. Too many good investments have (literally) sunk because of an underground water source that caused cracking and damage after time, or because a particularly foul-smelling enterprise opened up nearby. A geotechnical assessment as well as a physical assessment of the area will save you a lot of trouble in the long run. If the slope of the block is too flat, you may end up with flooding issues, while a very steep slope is going to be trickier to build on. Likewise, mature trees are going to be expensive to move. The house itself doesn’t necessarily matter – look at the size of the lot. The house itself will always depreciate and require maintenance, whereas the land value will keep increasing. Choosing a bigger or better situated plot will always beat a prize home.
All real estate investments are risky and pay off over the long run. Take your time to ensure you pick the right one.