Here are 3 KEY TIPS to investment success
Let's say you are looking at several different locations, how do you know which location will potentially offer you the best investment?
Perhaps if I put it this way it will be clearer. Let's say I am offered several different projects by developers to market and offer to my clients with a good advertising budget. After I have done the usual due diligence as to the reputation and quality of the developer, the layout and floor plans, the size of the project, the street location and views, the quality of inclusion, and so on, there are several other KEY points that I will use to narrow it down further BEFORE I would be willing to offer it to my clients.
I suggest you do the same before putting down you hard earned money on a off the plan property!
Let's look at Melbourne, as obviously that is the place to buy in the next few weeks to take advantage of all the forthcoming changes before July 1.
So let's say in the example above I am offered projects in the Melbourne CBD, the South Bank of Melbourne, Fitzroy North and North Melbourne.
How do I choose?
How would you choose?
Lets assume all projects are the same quality and are all fine on price and everything else.
Here is how I would select.
The VERY first thing I do is look at the rental vacancy rate, as this is SO important, and may enable me to rule out certain locations immediately. This is important as this shows me the demand for rental property in the area, whether there is any oversupply in the area, and the fact that my clients will be able to get rising rents in the future. So let's have a look at those areas first. All figures as at MARCH 2017
SOUTHBANK 3.1% (Too high)
MALVERN EAST 1.9% (No problem)
MELBOURNE CBD 1.4% (No problem)
NORTH MELBOURNE 0.8% (sensational)
FITZROY NORTH 0.5% (sensational)
Any result under 1% is very unusual, and means there is virtually no rental property on the market. Rents will be going up! Above 3% is not good. After any so called rent guarantee, your property may be empty and face dropping rents.
This means I would immediately rule out SOUTHBANK, as the rental vacancy rate is too high. It shows me Fitzroy North and North Melbourne are exceptional, and among the best in all of Melbourne.
The second thing I would look at is the ACTUAL number of rental properties on the market, as this shows me whether tenants have too much choice:
SOUTHBANK 198 (Too many)
MELBOURNE CBD 198 (Too many)
NORTH MELBOURNE 42 (excellent)
FITZROY NORTH 27 (excellent)
This would rule out Melbourne CBD and Southbank (again) and re-affirm the shortage of rental property in the other 2 locations.
NEXT, I look at STOCK ON MARKET. This is REALLY important as it is the actual number of properties listed for sale. This can give an investor valuable information about how easily it may be to cash out of an investment. It can also show how confident other people are in the market. Too many means too much choice for buyers, they can make low offers, prices may fall. The LOWER the figure the better.
SOUTHBANK 442 (Way too many)
MELBOURNE CBD 1,023 (WOW. NOT good)
NORTH MELBOURNE 104 (Good)
FITZROY NORTH 49 (excellent)
From these three test above, I would (and you should to) clearly rule out Southbank and Melbourne CBD, and strongly look Fitzroy North and North Melbourne, with Fitzroy North being a strong recommendation.