Here’s why property investors should buy owner occupier properties.
It never ceases to amaze me when I see property investors buy properties they wouldn’t live in themselves or at least buy for their children to live in. You know the type – matchbox size and shape, poor natural lighting and a floor plan that doesn’t make sense. Yet people buy them with the expectation of seeing a good rental return and capital growth.
Property investing is one of the three ways of creating wealth, the other two being shares and successful self-employment. But you have to get the fundamentals right. Buying property often comes with an emotional attachment. Unlike shares, you can see it, touch it, indeed live in it. Whilst the mantra with shares is to keep your emotions in check, it’s often a good idea to keep your emotions flowing when buying property for investment.
So, what should you look for when buying that owner-occupied property for an investment?
When buying units or townhouses, it goes without saying that buying in a small boutique block is far more preferable than buying in a sky scraper. Generally speaking, higher density developments have a greater percentage of investors which if history is any guide, has a negative impact on resale prices. And the reason for this is that tenants do not take as good a care of looking after the home they live in versus the person who owns the home they live in, in much the same way you don’t take care of a hire car the same way you look after your own. The flow on effect of this is renters are less likely to care about the ongoing upkeep of the entire block and over time, that has an impact on all properties in the block and prices.
Another important consideration is the floorplan layout. Once you buy, you can’t change the layout, or at least not without spending tens of thousands of dollars so you need to get it right. In any project there will be lots with great layouts and others, well not so much. So, one needs to consider the aspect of the property, where the natural light will be coming from, is the kitchen spacious enough for two people at a time and is the lounge and dining area separate or effectively one in the same. If you approach the layout as though you were to be living there, would it suit your needs. If you start to shake your head, then it most likely won’t be great for others too.
And last but not least – location, location, location. No matter whether you are buying a unit, a townhouse or a free-standing home, you need to make sure it is in the right location. The three key things to consider with location are being close to transport, shopping, entertainment and schools. So, if you are looking to buy in a particular town or suburb, do your research and find out where the more desirable places are that tick these three boxes.
Before you sign on the dotted line and use a Deposit Power Guarantee to secure your property investment, my advice to people is ask yourself this one question – ‘would I be happy to have someone I love live in this property?’. If the answer is YES, then you are on the right road to a successful long term property investment.