Hi Everyone,
Im still a newb in regards to PI. I have read a couple of books and am just wondering what a property has to have to satisfy your criteria to purchase it?
From what I have read / learnt is a potential property should have is some of the following:
Good vacancy rates
Planned or ear marked future developments in the potential or neighboring suburb
Good past growth in the potential or neighboring suburb
A positive population growth
Being closer to the beach could provide a high capital growth rate??
And if investing for capital growth, within 40 minutes to a capital city.Is there anything else I have either forgotten to put down or should be up there on an IP criteria "chechlist" that must be met?
Would someone be able to state what criteria should be met for regional and suburbs close to the city? If there is a difference?
What are are some points on your checklist that have to be met?
Thanks,
Chris
Hi Chris
Another that I like to tick off the list is "value add potential" – I like to purchase IPs that can be cosmetically renovated for instant equity gain. Helps to build the portfolio quicker.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Nice one Jamie!
What specific things do you look for with your strat? Do you look for slightly dated appliances / kitchen / bathroom / wall colours etc or is there a lot more to it?
You need to understand what a reno'd property costs to buy versus what an unreno'd property. You also need to understand the price of certain things. eg cost of a new kitchen, cost of just changing the cupboard doors or just painting them, cost of new carpet, cost of painting etc. This will help you identify which properties can offer you maximum gain for minimum outlay.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Thanks JacM.
Is as simple as checking the price of a renovated property and unrenovated property in the same location / pocket of the surburb via realestate.com.au?
Chris
That will give you a rough idea, but remember that you will only be able to see the prices that vendors are "hoping" to get for their properties… not what they "actually" get. You could take a look at auction results and so on in the local paper, and also on sites such as realestate.com.au. Going to a bunch of open for inspections will help you get a grasp on "what costs what" too.
The kitchen planner tool on the Bunnings website can give you an idea of how much cabinetry would cost. Of course, a custom-made kitchen will be a bit more, but not by a great deal. I've just done a reno and decideded to go with custom-made cabinetry because I had to fit some of my cabinetry precisely between two walls. I couldn't imagine DIY-ing my way to glory and getting it right "to the millimetre", so I outsourced. But the price differential was only a couple of hundred dollars.
Visit flooring centres to understand the cost per square metre of the various different flooring options and so on.
Learn something about the cost of paint – it's more expensive than you'd think. In general 1 litre of paint covers 12 square metres (so for 2 coats you'd need 2 litres per 12 square metres).
Also learn something of window coverings that are appropriate for the type of property you are targetting (eg pvc venetians is fine for low to mid-end stuff, but wouldn't cut it in an expensive suburb, so you'd have to go with plantation shutters.
Eventually you'll understand the pricing of the big ticket items and be able to wander into a place and say RIGHT. This place would cost $xx to renovate and at renovation I know I'll be able to sell it for $zz. Factor in stamp duties, legal fees, capital gains tax etc (if selling), and that will show you the maximum you could pay for a property before it becomes a break even or a loss.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Use the website onthehouse.com.au to look at prices that properties have sold for recently in a given area
Thanks rootietootie for posting website onethehouse.com.au….its fantastic…just what I have been looking for!
Thanks for all your help guys !! Just a few more questions if thats ok?
What I stated regarding finding a property that will have good future growth, is this correct? I know nothing is certain, but would what I said give a higher chance of a good capital growth over x number of years? And is there anything else that you should be looking for in the property or suburb that will give a better chance of good growth?
Chris
If a town has performed well over a decade, it will likely perform well again over the next decade.
A great indicator of growth is forthcoming infrastructure (new freeway joining the town to a major city, new train line etc)
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
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