Have you made your 2014 investment property resolutions yet? It appears the old adage of ‘location, location, location’ has never been truer.
But there are a number of points to consider before you start. So, get our your pens and prepare to write you plan.
Do your investment property homework
A good place to start is with the latest House Price Indexes from the Australian Bureau of Statistics. Annual growth to September 2013 indicates Sydney as being the clear winner. But growth has also occurred in Melbourne, Darwin and Brisbane.
In regional Australia, annual growth is good in towns such as Miles and Cloncurry in Queensland and Narrabri in New South Wales. If mining towns are in your investment property plan, you’ll need to do extra research to ensure you have up-to-the-minute data – some mining areas are doing better than others.
Keep an eye on the RBA
Economists taking out their crystal balls are split on interest rates. Some see a move down in mid 2014 while others predict a hike in late 2014. While nothing is certain in life, it’s worth considering what’s the right time to move.
Banks are also highly competitive right now, so see what each of them has to offer – including those beyond the big 4 banks.
Off the plan or established?
According to the Housing Industry Association, new house building in Australia is expected to continue growing in 2014 in larger states such as NSW, Queensland and WA.
Meanwhile, HIA senior economist, Shane Garrett says that investment property renovations are also expected to grow in a majority of states and territories after falling to a ten year low during 2012/2013. If you have the time and the skill set, renovation can be very profitable, but if you’re time poor, off-the-plan or a fully renovated property may be preferable.
House or flat?
Record low interest rates and increased population growth will see many apartment blocks selling ‘off the plan’. If this is what you’re thinking about, make sure you know what you’re paying for – and what you’re not paying for.
Make sure you understand who manages the building, what the ‘common property’ areas are and exactly what the strata levies cover.
If the flat you are considering is in an older block, it may be worth investigating if any large projects have been undertaken in the past 5-10 years – the last thing you want is to purchase your unit, only to discover a major project (that’s bound to break the sinking fund) is looming.
Before you buy any investment property, seek professional advice. Your lawyer and your friendly mortgage broker can help you with any information you may be missing.