FAQs
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How do I pick the best area for capital growth?
Answer:
Although it is human nature to want to find a bargain in an area of great capital growth, I believe it is false economy to spend a huge amount of time searching elsewhere for gems that are probably buried in your own backyard. It is virtually impossible, and really unnecessary, to gauge just where the most valuable suburbs will be in the future.
It is far more important to find an area that you know well rather than try to guess the area that has maximum capital growth potential. History has shown that reasonably well-located property should follow the pattern of around 10 to 11% capital growth over the long-term.
If your property achieves better than this, it's more likely good luck than good selection. Rather than spending weekend after weekend driving from one side of the city to the other, you can maximise your returns and better manage your investment by organising your finances in the best possible way and ensuring that you pay only fair market value in an area around your home with which you are familiar. Of course, this may not always be achievable, particularly if you live in an expensive suburb and you find that you have to go further afield to find suitable rental property.
[ FAQ | Buying or Selling Property ]
Is a holiday unit at the coast a good investment?
Answer:
It can be if you are careful to distinguish between an investment and a luxury. If purely for investment, the returns can be as good as permanent lettings if it is let for half the year at twice the normal rental.
This means that you use the unit when it is not let rather than letting it when you are not using it. If however, you want it solely for your own holidays thinking it will serve as an investment as well - think again.
None of the expenses (including interest) is tax deductible so it could be an expensive luxury. By the time you have created your wealth, you should well be able to afford a luxurious holiday unit that you can use at any time you so desire.
[ FAQ ]
We seem to be in the middle of a recession. Is it still a good time to buy rental property?
Answer:
The herd mentality of the population is such that everyone buys when everyone else is buying and sells when everyone else is selling. (Statistics show that most investors bought in the midst of the last property boom when interest rates and property prices were at their highest!!)
Successful investors look on a downturn in the economy as a great time to buy and they then take all the necessary steps to ensure that they are able to hold long-term to reap the rewards of future recovery.
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