While 2023 is going to be challenging as property investors continue to navigate the changing rate environment, there are four “golden rules” they should undertake to be able to take on the opportunities as the year unfolds, according to a property adviser.
The four rules involve budgeting, buffering, diversifying, and researching
Budget ahead
Suburbanite principal market commentator and valuer Anna Porter said property investors must learn to budget ahead, especially amid the changing rates and surge in costs of living that have already made a dent in the budgets of many households.
“You'll want to budget ahead as this is certainly not the year to fall victim to stretching yourself thin,” she said.
“Set your budget from the start and ensure you’re leaving enough room to be able to counter any further rate rises or unexpected expenses.”
This is especially important as another property expert outlined negative cashflows of $15,000 could be common this year.
Have a buffer
Buffering is also crucial when making decisions on property investment — Ms Porter said buffers will help investors when buying from homeowners who maybe selling their homes at a low price but with a catch.
“Not only can we expect to see a rise in mortgagee in possession sales, but we will also see a rise in homes for sale that may have some defects,” she said.
“You might be snatching a bargain but there could be defects you didn't see warning of, and you’ll need a buffer to address them.”
Diversify
Ms Porter said the year will also teach investors to explore beyond their usual zones and diversify.
“This is the year to look outside of your backyard — you can still get a great investment property in South Australia with less than $500,000,” she said.
“Don’t be fooled, owning a home and investment in the same city is not diversification."
Research
The opportunities that can be unraveled through diversification can provide satisfying gains for investors — however, it is a must that they do their research and know their numbers to know where they can get the most out of.
For instance, investors with a purchase budget of around $500,000 can look for opportunities in Perth and Adelaide.
“With this kind of investment you can typically get an older house, under half an hour of city or a townhouse or villa in closer proximity to the CBD,” Ms Porter said.
Still, investors must dig deeper and know where the markets are standing in terms of fundamentals like vacancy rates, dwelling price growth trend, and yields.
“Speak to valuers and local agents to make sure the numbers stack up and cross reference this with your own research,” she said.
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Photo by kanchanachitkhamma on Canva.
