In good times, it’s easy to become complacent when choosing an investment property. The media’s full of hype, prices are skyrocketing, and people are in a scramble to buy. It’s not unusual in times such as these to think that anything you touch will turn to gold. But it’s not until things get a bit rocky that the market really starts to sort out the wheat from the chaff. Properties that never had the right fundamentals get hit hard, while the rest calmly weather the storm.
With the market turning upwards once again, I’m sure many of you are contemplating acquiring an investment property. If you are, learn from the mistakes many others made in the last boom and purchase wisely. You must always remember that not every property is the same. In fact, the potential for growth in each property can vary quite dramatically.
Let me explain. What would you say if I offered to write you a cheque in 10 years’ time for $75,000, no strings attached? I’m sure you’d jump at it. Well, buying a $500,000 property that experiences a 7% average annual growth compared to one with a 6% average annual growth will result in around $75,000 of extra equity. Even after only 5 years, the 1% difference will put about $25,000 extra into your pocket. It’s a simple example but just goes to show property selection is critical to maximising your wealth.
Selecting the best possible property often comes down to a number of factors. In this article, I’m going to focus on just one – supply.
Supply is just one half of the equation, demand being the other. If demand for houses increases faster than supply, then prices will go up. If demand decreases and plenty of supply still remains, prices go down. And naturally, if they are about equal to one another then prices will remain relatively stable. Not a bad thing, but not a good thing either if you’re looking to build your wealth as fast as possible. So if you’re looking to buy a well-performing investment, it makes sense to look for something in an area with relatively limited supply.
Areas with limited supply tend to be those that are well-established. If you buy a 3×1 in an area that is 30-40 years old not too far from the CBD, you know that supply of that type of property is unlikely to increase substantially as there is no more land available to build on. Assuming people hold a desire to live in that area and, better yet, you predict that desire to increase over years to come, then you can be reasonably confident your property’s value will continue to rise. But just buying in established areas close to the CBD is not necessarily secure for every type of property. Consider a 2×1 apartment just a short stroll from the CBD. If there is surrounding land ripe for development, or plenty of old buildings ready to be demolished for brand new apartment complexes, supply of apartments in that area could be plentiful. When researching an area, I find it valuable to contact the council to find out what plans there are for the area. Potential changes to zoning to allow more subdivision or demolishing of large schools or hospitals to accommodate new estates in the area, may all impact on your decision to buy whether for worse or for better.
Venturing out further from the CBD often leads to areas that are relatively new and perhaps starting or in the midst of development. Many are usually abundant in available land, both in their own suburb and in future areas surrounding it. Whilst I certainly believe there are some good buys in such areas (due to them possessing other key fundamentals), they can be risky due to excess supply issues.
Often supply needs to be considered in light of time. There may be enough land in the area to develop for another 10 or even 15 years, and if there’s a real chance you may sell in that timeframe, you may be caught fighting against a hundred other similar homes on the market at the same time. With plenty of competition, it’s unlikely houses in the area will be achieving significant price growth. In this scenario, you might find your money may have been better invested in another area.
But sometimes supply is not always about what land or opportunities are around ready for development. A character home from the early 1900’s in an area with plenty of redevelopment going on, will still fare well. That is because character homes themselves are always in limited supply – what stands today is all that will ever be. No matter how much land is created in that area, you just cannot duplicate the age and real features of a character home that are much desired.
The concept of supply and its impact on price growth is actually quite logical but it’s something that many investors somehow seem to forget. Perhaps they get carried away with the excitement of buying, are won over by the beautiful décor of a place, or can’t resist a so-called “bargain”. This is why it’s so important when buying an investment property, to think with your head and not with your heart.
Remember, if you want to build real wealth it is absolutely crucial to buy property that outperforms the market.And aside from supply, there are numerous other factors that should be considered when selecting a property.
feed-reader
seniorliving
frezyderm
nofxofficialwebsite
kraftwerktools
cdt-platform
reals-gooods
brocholec
zonnepaneelnederland
wskazniki
prelmalink
finding
djy
bangyong
n63
discoverytsx
kkr-hotel-tokyo
projoom
moiprofi
photographie-sk-kultur
hammerhead
raumnes
shortylsignup
biodiversidad
handmadecanberra
mert
lakodosajta
dlmeacham
rlaxxtv
astra
sanxia
sczhida
gutbrod-ofenkeramik
asamm
menopausecafe
hnysqzj
valtechnologie
geauhechanta
akj
ausloans
kunsthausdresden
cocreliribagxa
ictmedia
incodescent
modec
lscjy
onemotion
moodlemoot
oxygene
sluurpy
starhop
ticketos
pennyweightonline
hf0760
gsanetwerk
ihaa
wheatcommunications
hostroyale
saraputt
alli
sterlingandwilson
mrsdalloways
garden-plat
c19study
selfregional
998zx
newmen
lephoceen
kastrullset
anthemis-hebergement
mof-glk
aussiebeef
cancer-id
eurom
go2tw
energyandresources
seekoje
creativecurvemedia
gopinath
36ng
pixelgenius
ccxp-cologne
experimentalworks
zsgushi
nordstormgiftcardbalance
ikarus
greatbritainhockey
chillertheatre
michaelstars
ca
financialexecutives
cinnamonnetwork
therebelape
sickrage
enterpriseeurope
632548
xydxhb
friends
r4ny
porno-video
euser
microscope
landit
amarcord
women-inventors
fengchaomy
erciyesteknopark
epeqe
gethuan
generation30publishing
seodyy
diewerbtaetigen
tuxmagazine
constructionjunkie
zit
syde
rusbase
vipavdh
hardhoutdiscount
fsdh11
vonkfengjiangzhi
vlex
powerboatmagazine
nijichat
jtliangyou
camwordlubergau
mogi
sexologicalbodywork
dox42
spsbv
geneandgeorgetti
itat
stadionwelt-business
schoepflin-stiftung
persianblog
thehealingplaceinfo
alexwesterman
sugoren
popispoljoprivrede
ymc
lobsterknuckle
invoicehome
laurentienne
tamazulapan
puitech
adprint
volkl
czbjkyd
tmarkiewicz
t-pbs
fei-long
kunyo
barcoo
biscuitfilmworks
events-kikaku
flashstore
koeln-orthopaedie
xporn3d
redvsblue
isobro
arkdatacentres
boostplatform
tourismcowichan
rosenundkohl
fffutu
amaredokan
lancemontana
sdgdwljt
technicallysimple
54papatv
francemarches
dongkuk
threeminutethesis
aerialsphere
zao-ski
providenceac
dawgsports
njaisp
lushidagong
cannacraft
allhandsondecknyc
krizalis
nettvplus
digma
chcs
beatsperminute
eaonline
envelopments
wibbo
iehito
hancock-team
maggielouiseconfections
replikklockor
fatgripz
marcosymarcos
brandenburgische-sommerkonzerte
bezzydepression
advangelists
tobermory
adventist
babyli
inworks
zalando
ffflyer
sport-direct
securid
avalonorganics
wccannabis
producteurslaitiers
qmjvip
aceweekly
betausa
atreeforyou
welcomecottages
animaleriecrocsblancs
telstrawholesale
isr-messianic
autogravity
viagrappa
hotelnobel
forthankgismertdinggo
lawfoundation
bbsef
ville-bondues
benshoemate
google-gdata
onlinelisttools
emhs
cascomoto
breizhpress
codehelper
litten
morspb
gerflor
aclandanatomy
lashcode
golfatkapalua
juncscatar
huaaoshengxin
rockharz-festival
volvogroup
perfection
dovlnu
unisonsteadfast
stanfordmedicine
tjyzh
qweas
agtech
bestattorneysofamerica
lalik
monier
logositetasarimi
myersjj
e-u-z
xn--zpp-qla
luckyaffs
rangine
ecommerceillustrated
mindfullifetoday
leasepath
wisepowder
mylargebox
folicule
parkslopecollegiate
ccgr
familychecks
ehokenstore
lpwines
glucsudenfast
sheng-han
reconcept
boozyoyster
balihoo
electronicpartner
recipeapp
kreato
featureaffiliates
moviesjoy
nbs
beat-richner
magyarkonyhaonline
bottegavenetareplica
salehriaz
ac3
la-dame-du-web
capitol
vainu
zoomlainfotech
fellowtuts
notoriousnooch
iws
gzxw
seeoase-moehnesee
annugratuit
stair-treads
loldytt
mantisworld
furusato-izumisano
desicomments
gatheredhere
arduino-info
getmapping
ljusgiganten
livlabsnow
cashmoneypage
cresifbomaka
amaze
isrotel
storecenter
vrk
listeningtreebooks
wphelper
ak-samvirke
mysterypollster
iatuc0e2xz
sogeti
11
coduka
contabo-status
zkssi
xingantv
junge-klassik
trippysche
autohitel
classiccablecar
lrandiavelmidismi
u179
vaxjolakers
spiil
gzbbw
deweysdesign
m2mgermany
furious7
sistemasacr
jackrabbitreservations
drobe
ostgotamusteri
108tests
wcrc
gxgcedu
dehpa
actulab
sun-ste
pulpandpapercanada
southwesternindustries
utinaturen
henleyhs
huffindustrialmarketing
fwmrm
shin-gogaku
connexiondetail
sellry
139jy
techilife
fremontcasino
dyrevaernet
kobekita-aeonmall
krups
lisenhs
generativeartistry
ashtanga
europeanyouthcard
femeialider
thrive
all-languages
riff
gacquotemarketing
projectoar
oneday
sdut-eldercare
squirrelsnutbutter
maplarge
tom021
vanshine
xn--obegrnsad-surf-9hb
securityvystroj
tuckermax
leadsandmore
tngforum
atlantajcc
goodtyping
tbwachiatdayla
tablesdemultiplication
vumigroup
vakantievergelijker
samdrewtakeson
mielno
honeypot
ibcwebcourses
2290online
