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How to win in the property market

Property is widely regarded as one of the few places where you can get rich without having any money. This might not be entirely true, but the theory is good. In short, if you have no money you need collateral in order for the bank to loan you cash. When looking to buy property, the asset that you are buying is expected to appreciate rather than depreciate and as such it is quite a safe bet for the bank to grant a mortgage secured against the property. There is still plenty of work to do after this in terms of repaying the bank, but it is a great place to start. So, if you are looking to get into the property game, here are a few things that you should consider.

Say no to emotion

As is the case with any investment, investing in property should never be about emotions. Just because you grew up in Balwyn and you have such great memories of the place, it doesn’t mean that if you see sign advertising houses for sale Balwyn that you should suddenly start looking there. You need to look for places that fit into your budget and which work in terms of your strategy. Memories, looks, and emotions are no way to build an investment portfolio.

Pick the path you want to take

The most important thing about playing in the property space is that you need to have a strategy. Ask yourself the important question, ‘what is your goal’? You can only really win in one place. So, is it going to be in terms of rental income or is it going to be in terms of capital growth? You might be able to find a property that works on both fronts, but the reality is you should probably plump for the one over the other.

Buying to rent

When buying to rent you should look for apartments rather than houses and they should ideally be places that are liveable immediately. The longer a rental property stands empty, the more it costs you. With rental properties what you are looking for is a place that will generate good rental income, ideally where you receive monthly payments from your tenant that are more than the combined costs of your bond and levies. If you can get this right, then you will be winning from day one. The goal of rental property is to own many. That way once the bonds have been off on the initial purchases, the income they are generating can be channelled into paying for more places.

Buying for capital appreciation

In this instance, you are less concerned about the rental income and more interested in adding value to the property that you have bought so that you can sell it for a profit. In this instance, you want to buy the worst property on the best street. If you can get that right once you have worked your magic on the house, you will have a great house in a great area, and you are almost certainly going to be able to sell for a tidy profit. Just avoid falling into the trap over over-capitalization and doing too much work on the house.

 

 

 

 

 

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