LESSONS
Be Streets Ahead
R
Tips for success
ichard Wakelin co-author of Streets Ahead:
How to Make Money From Residential
Property, offers these seven tips for successful
property investing:
1. Go for capital growth
This is the most important consideration when buying
an investment property. Capital growth will increase
your equity or “net worth” more quickly than home loan
repayments alone. Research annual median values and
track recent sales to identify high growth areas. Look for
streets or precincts featuring architectural uniformity with
a broad appeal.
2. Inner city is best
In general, capital cities are the prime location for an
investment property as they tend to enjoy ongoing demand
from buyers and tenants and solid economic activity. The
inner city suburbs tend to produce the most sustainable
and relatively rapid patterns of long-term capital growth
as virtually all the available land in the inner city is fully
developed and demand for quality residential property
consistently outstrips the supply.
3. Add value
Choose a property that can
be inexpensively improved.
A fresh coat of paint and a new
carpet can add value to your
investment and increase
your rental returns. Be
aware of any unseen
structural works such
as re-stumping and
re-wiring as they can
be expensive to repair.
4. Invest for the long term
Time in the market – not “timing the market” – counts
most! As you never know when the market has peaked or
troughed until after it has happened. The longer you hold
a high quality investment the better.
5. Be tax smart
The tax advantages of negative gearing are a key feature
of property investing. Negative gearing involves
borrowing to invest. Take advantage of tax benefits such
as negative gearing, but be aware that saving tax without
achieving consistent growth will never confer financial
independence.
6. Location, location
Purchase a property that is close to essential and desirable
facilities. That means within walking or a short driving
distance to schools, public transport, shopping areas and
leisure and entertainment options such as public parks,
cafes, restaurants and cinemas.
Sometimes you can identify pockets with future potential.
Look for precincts with the same characteristics as
established prime areas but a lower buy-in price, as they
often qualify as genuinely undervalued. Watch what first
home buyers are doing. If they begin moving into and
gentrifying a particular area in large numbers, you may
well have found an undervalued area.
7. Knowledge is power
As with any investment class, always research your
property purchase carefully and keep a close eye on
market trends. Monitor ‘big picture’ factors like interest
rates, economic growth, government policy, demographic
trends and local developments.
RESOURCES
Richard Wakelin
64
Residential Handbook 2013
www.reimag.co.za