A GREAT INVESTMENT PROPERTY, OR IS IT REALLY ?
How do you really know if it is a good investment, after all the real estate marketers are stating that it is a Great Investment Property and the market is on fire.
The Australian Property Market has many segments and this is more than likely the same case in other markets through out the world.
In Australia we will discover that not all our States property cycles are trending in the same direction at the same time, meaning that one particular State is growing rapidly and other States may be flat with no growth or even indicating a negative Capital loss.
With out naming a particular State, lets assume one is currently going through a residential property boom cycle. Before we go any further we need to understand that if one of our States is booming that does not mean that all the other States will follow.
Now lets look at the State that is currently showing a very active market and signs of strong Capital Growth. Within this market we will have micro markets and this is when you will need to be careful. There will be suburbs that have exceptional growth and other suburbs that have slow or now growth at all. You will need to as the saying goes, compare apples with apples, therefor match the property of interest to a similar property in the same suburb with similar attributes such as the land size, Aspect and Topography of the property, Construction type and size of improvements as well as the zoning.
Date Address Beds Baths Cars Land Price Condition
3/10 1 Smith 3 2 2 550 330,000 avg
6/10 12 Smith 3 2 1 490 310,000 avg
7/10 26 Smith 3 2 2 590 340,000 better avg
8/10 38 Smith 4 2 2 545 365,000 avg
9/10 78 Smith 4 2 2 685 395,000 better avg
Within this State we also have different property segments other than residential houses and units. These other markets are and not limited to Retail, Office, Bulky Goods, Shopping Centres, Caravan Park’s and Hotels and Motels, Industrial and other commercial uses, these markets have their own grading and cycles.
There for do not assume if the residential investment market is firing in a particular area, that other segments of the market are also firing as you will discover they have their own cycles.
Caution should also be applied when comparing houses with apartments, even though they fall into the residential category, they are two different types of classes.
Educate yourself and apply due diligence, seek the assistance of local professionals with in the industry.