John Fitzgerald, chief executive officer of property investment firm Custodian, believes too many people have location only at the forefront of their mind when looking at properties to purchase.
“Location is important, but it shouldn’t be the thing that makes you choose where to buy,” Fitzgerald said.
“People get hung up on it and that’s how they end up letting their emotions get the better of them, and buying due to emotion isn’t a smart thing to do,” he said.
Fitzgerald has three things he takes into consideration when buying, and location comes third on the list.
“What people should be considering is land content, timing and then location,” he said.
“If you consider those three factors you’re likely to buy a property that is going to be a sound investment.”
Land content comes first for Fitzgerald as that’s where he believes the best returns come from.
“It’s the land that’s important; land appreciates in value while buildings depreciate.
“If you buy an inner-city apartment for $1 million, then 90% of that value is for the building, but if you buy a house in the suburbs then 40% to 50% of the price is in the land.
“We were buying in Sydney and the land was probably $400 per square metre and it’s tripled in price to $1,200 per square metre now. You’re not going to see an apartment give you similar returns.”
Timing is simply understanding market cycles, which Fitzgerald says run in roughly 10-year periods.
Currently Sydney is nearing the end of its cycle, which is why Fitzgerald is targeting Brisbane and Melbourne right now.
Fitzgerald’s idea of good may be a little different to other people’s.
“A lot of people think they need to be close to the city, but that’s just their emotion taking over.
“You need to take a step back and look for other things.
“I use a rough template to find good locations. I’m looking for high population growth, near train stations, shops and good job opportunities.”
John Fitzgerald will speak about his investment strategy at The Property Buyer Expo that takes place 30 October until 1 November at the Sydney Showgrounds in Homebush
Come say hi to the YIP team at the Expo and hear from some of the best minds in Property. Get your free tickets by entering the code YIPPBE when you register at www.propertybuyerexpo.com.au.
