Avoid These Properties At All Costs

There’s no “one size fits all” strategy to property investing, so there’s definitely no “one size fits all” strategy when it comes to investing altogether.

Some people choose business. Others choose stocks and shares.

I chose property.

Specifically, I chose “blue-chip” property. Blue-chip property is property located in blue-chip locations. Locations that don’t rely on short term or sporadic industry and trends.

These locations (generally 3-15km from a CBD) continue to rise the most consistently over the long term due to a lack of supply and increasing demand from high income earners. If they can’t create more property in that location, demand continues to be strong, then I (and leading economists) believe prices will continue to rise.

As for why I chose property, it simply came down to what I was passionate about and also where I see I am able to leverage money best. Property provides some excellent opportunities to leverage borrowings and with my strategy, allows me to borrow against equity in the properties as their prices rise, so I can realise some of the profit without ever having to sell the underlying asset.

If you prefer stocks, shares, business or something else, then I say go for it. If you are passionate about it and understand how the investments work, then I’m not going to talk you out of it.

My only suggestion is that you seek expert guidance and education, no matter what you choose.

Property itself can be an exciting way to grow your wealth, though it’s littered with potential disasters, especially if you try to “fast track” the process, or think you can “get rich quick”.

On the Your Empire blog, I have previously written about the warning signs of property investment where I go into more detail than this email.

The bottom line is that I always suggest people proceed with the utmost caution when approaching property investing.

From the full blog post, here are five of the biggest warning signs I suggest new investors keep their eye out for.

I always say there’s no such thing as “get rich quick” in general, but that is definitely the case with property. “Hotspot” investing is like trying to catch lightning in a bottle. Miss the timing, and you might end up with an asset that fails to grow, or worse still, can sell for less than you paid.

Remember, quick gains often come with high risks.

Property “hotspots” makes a great headline and the promise of fast riches always appeals to the masses, though you need to be aware of the facts and prevent yourself from making emotional decisions.

Investing in “hotspots” is like gambling. Yes, some people have built serious wealth from it, though these people are the ones who get in (and out) first… long before the general public has any idea.

A guaranteed rent sounds like a sound investment strategy in theory, though always be sure to dig deeper. Sometimes, these guarantees mask inflated property prices, leaving you paying more than the property’s worth. Always prioritise the property’s intrinsic value over sweet-sounding guarantees.

Click here to see the full article with financial examples.

Diversification isn’t just for stocks. It applies to the industry supporting property investment locations too. A town reliant on a single (or few, or seasonal, or temporary) industry is unstable at best, though can turn out to risk your entire investment.

Usually these locations are touted by people who stand to earn huge commissions of the back of the hype created.

I only ever suggest people buy in areas with extremely diverse economic drivers.

If you are considering say, an apartment in a residential block, it’s always good to ensure a balance of owner occupiers and investors.

A community of investors might sound like an interesting prospect, but it can lead to volatile market conditions, especially in downturns. Balance is key.

Discover the pro’s and con’s in the full article here.

Falling for the allure of brand-new properties? Ensure you’re not paying a premium over comparable, well-maintained second-hand properties. Sometimes, older properties offer more bang for your buck and align better with local demographics.

My portfolio (and what I recommend for investor clients) is almost all second hand, median priced property in blue-chip locations.

I want to always own property that is going to appeal to the vast majority of potential renters.

I still find it incredible that people try to buy property by themselves. There are experts that do this for a living. All day, every day.

Our team remains on the cutting edge of search, inspection and validation of potential properties for clients.

On your own, the whole thing can be overwhelming.

The reason I started Your Empire in the first place was because friends saw what I was doing and asked me if I could do it all for them too.

It’s about industry contacts, calculated steps and informed decisions.

You don’t have to feel overwhelmed.

Every property buyer starts somewhere and every misstep is a learning curve. What’s essential is to start informed and prepared.

Click here and book a time to discuss your needs and get your questions answered. It’s free.

Compare listings

Compare
Search