Land Appreciates
The appreciation of the land is where we make our long term money.
Houses Depreciate
Houses depreciate, so we are always looking for house and land.
Cash Flow
The depreciation and the rent is how we manage our cash flow over time.
Land
The more land the better, but if there are larger blocks around us this will usually help pull up the price of our completed house over time – so the biggest lot in a development is not really an advantage.
Growth
Property values generally double every 7 to 10 years, and sometimes they don’t.
Long Term Investment
Property is a long term investment. If you want to make short term gains in property, then ‘active investing’ comes from things like subdividing, or buying and renovating. These activities usually require a lot of time and there are no guarantees of a quick return. These strategies often still rely on the market moving.
Commutable
We like properties that are commutable to the main capital cities, as they will always have a larger level of employment and are more resilient to employment fluctuations than smaller cities or towns.
Below the Median House Price
We like properties that are below the median house price, which makes them affordable to all. The more expensive your property is, the less prospective buyers or tenants you will have relative to other properties.
Yield
The rental yield on two cheaper properties is usually better than that on one more expensive property, allowing you to hold more properties and limit your exposure to vacancy risk.
New Properties
New properties help you take advantage of depreciation to increase your cash flow by reducing your tax.
Adopt Early
We like buying in growth areas that are not yet necessarily established. Some of the best long term investments are in areas where transport, schools and shops are earmarked but not yet built.
Fixed Price
Using reputable builders who include full turn key and fixed price site costs. Often “volume builders” will sell you a property as a full turn key, but it isn’t. You want builders that will do everything, the letter box, the curtains, the full landscaping even down to the toilet roll holder. It pays to compare the price of a full turn key compared to a “partial turn key”
No Apartments
It’s important to own your own block of land, I try to stay away from apartments or anything with a body corporate. Body corporates take away your control of the block and can sometimes end up being very expensive. If you do your research then there are times where it may be ok.
Finance Structure
A simple finance structure makes administration of your properties simpler; are cheaper at tax time to manage; and makes it easier to plan for your future borrowings.
This article and the contents provides general information only and does not take into account your individual objectives, financial situation or needs. You should assess whether the information is appropriate for you and talk with your financial or other professional adviser before making an investment or financial decision. The contents of this article are not to be relied upon as a substitute for financial or other professional advice. Figures quoted are indicative only