As I have observed on numerous occasions in this column, one of the most common challenges facing the novice investor is the sheer volume of information that is available. It is relatively easy to collect this information, much less easy to interpret and filter it in a meaningful way. Firstly, there are lots of different strategies out there, and every property expert has their opinion on which strategy is the best. Do you go for new or old? Regional or Metro? House or unit? Then there is the matter of where to invest. No sooner have you decided that Central Queensland is a great place to invest you read an article that tells you that Whyalla in SA, or Orange in NSW has great potential. How do you pick which one is best?
Strategy Comes First
One way of cutting down the amount of info that you have to sift through is to choose your strategy before you start looking for a property. If you are clear on what strategy suits your circumstances best it will save you heaps of time and confusion, as you will simply discard or ignore any information that is not relevant to your chosen strategy. My aim is to make investing in property as easy, stress free and low risk as possible. So I have a ‘set and forget’ strategy. This involves purchasing only new properties in areas with large population bases and robust, diverse economies. I look for affordable properties that are in demand by tenants and so enjoy low vacancy rates and relatively high rental yields. This is a great low-risk strategy that suits the majority of investors who have work and family commitments and are time poor.
Don’t Procrastinate
Many investors miss out on opportunities because they cannot narrow down their search area. They want their first investment to be a good experience, and to be as close to ‘perfect’ as possible. Say an investor has been researching the Mackay region, and has been very encouraged by their findings. They have narrowed their search down to a couple of preferred suburbs and have a shortlist of properties in those suburbs that meet their criteria. But then someone suggests that Whyalla in SA is a great place to invest. Apparently it is the ‘Gladstone’ of SA with properties still quite affordable and great potential due to the Olympic Dam project and other resource related infrastructure spending in the state. Then they read somewhere about the proposed $30 billion Browse Basin project just north of Broome and how this could drive up property prices and rents in the area. Which area should they choose? Some investors get overwhelmed by too many choices and keep delaying a purchase as they wait for clarity. Many prospective investors actually end up not buying anything at all, unable to pick a clear winner. So which is the ‘best’ area to invest in? Well, the truth is that ALL these areas should increase in value, so whichever one you pick you will hopefully have a good long term investment. However for me the choice is easy. Mackay has a population of over 100,000. Whyalla has a population of around 20,000. Broome has a population closer to 11,000. So Mackay wins hands down when measured against my criteria for low risk investing. This doesn’t mean that I am going to completely ignore any information on what is happening in Whyalla or Broome – I will certainly keep my eye on these areas for my own general interest. But I am not going to waste valuable time doing in-depth research into these areas because my strategy rules them out of any serious consideration.
Summary
One of my favourite sayings is that if you want to be an investor, you actually have to go out and bloody well buy something! If you have a clear strategy and your research is sound you should make money. If you have found a property and an area that meets your investment criteria, do not be afraid to act. Experience in property comes from the buying process more than the research process, so don’t be continually looking for even greener pastures as this can lead to chronic procrastination. And as always, if in doubt do not be afraid to ask for help from someone who has more experience than you. More experienced investors can often put things into perspective and reassure you that you are making the right decision. Happy investing!
Ian Hosking Richards is a successful property investor with a portfolio of over 30 properties. He is the CEO and founder of Rocket Property Group, a leading independent real estate agency that helps hundreds of people each year enter the property market or grow their existing portfolios.
For further information or assistance, please visit www.rocketpropertygroup.com.au or call 1300 850 038.
