Hi Jenny,
As Perth is my speciality I'll do my best to offer advice.
Firstly, I'm going to be a little controversial and slightly disagree with goonandtell. However, before I worked in the industry it is exactly what I thought until I realised, who is willing to pay the most for your investment? An owner occupier, and of course, in some suburbs we will see prices being bid up purely buy home buyers because it is an area where a selected demographic likes to live. Now even though you are an investor, you want prices to be bid up, because this is what will have a flow on effect to your equity.
When buying a property for client, I would suggest looking for a suburb which attracts the demographic with high income appreciation potential. The reason for this, is their income increases they can; a) spend more money to buy a property or b) renovate their existing property increasing the aesthetics of the area. I like to target young professionals, because they have dual incomes. This market is looking for 3 things: close to everything (beach, café strips, shops and amenities), a bit of funk (the suburb can be old) and within a budget as their incomes are still increasing. A good practical example of this can be seen 25 years ago in Subiaco’s, Leederville’s and Claremont’s demographic enhancement. House prices in these suburbs where similar prices to half acre blocks in the outer suburbs of Perth (please not the land value was similar, even though the physical size of the blocks were smaller).
The northern corridor of Perth offers a lot of this. However, once you have an area mapped out, this is when picking it gets a little harder. You have to get in their head, and realise what young professionals. Bedroom sizes, layouts, neighbours (these suburbs have a lot of Housing Commission), types of amenities that are more important to be close to, location to things and a many other factors. Another great one is, future things, look to where private and public spending is going and unrecognised forewarned zoning changes.
Now this is where the real twist comes for investors. If the property is so good, wouldn’t it have heaps of competition anyway? A couple of things help us buy at discounts. I find the most important thing is having a vision, look for a great property that has potential to add value. You must have the vision of would it appeal to the market in the future. One example is run down properties as the lack of aesthetics is often what deters competing offers. This means that we are able to get decent discounts on these properties.
Now, you may ask why I do all this extra work looking for clients properties. If I’m able to get them just an extra 1% capital growth over the term of their investment that’s millions of dollars of difference in wealth. Not only does it have a compounding effect, but it also allows you to buy your next property sooner. If you are looking for even more information on where to buy, we run training session from time to time, send me a message and I would be glad to organise you a complimentary ticket.
5 Golden Rules summed up:
1) Target a good demographic.
2) Aim for land content value of more then 50% (Not necessarily land size).
3) Look for future area improvement.
4) Buy a property well with the potential to add Value.
5) You can never do enough research.
