5 ways to maximise your potential for capital growth with property
October 30, 2019
Investing in bricks and mortar has long been considered a good investment however fluctuating market conditions doesn’t always make it the most popular! With consistently low interest rates in the market at the moment, it seems a lot of people are keen to get back into the property market. Investors are often interested in taking advantage of negative gearing, but the flip side of that coin is considering the capital improvement in your investment property over time. Buying a property with higher than average capital growth can very quickly add a lot of value to your net position. We have all heard that adage, “location, location, location,” but what does that actually mean?
Credabl spoke with buyer’s advocate Ying Chan from Eclipse Property Advisory who gave us a few pointers to keep in mind when trying to maximise your potential for capital growth in any property purchase:
1. Location doesn’t just mean your address
The suburb you buy in is very important, but having a property in a great suburb doesn’t automatically mean you’re going to see great growth in the property value. Other location points such as street, part of the street, or even location within the block if it is an apartment, townhouse, or unit can be equally important.
2. Proximity to work and school
People like to minimise their commute time wherever possible; we’ve all got more important things to do with our time than sit in traffic, right? Buying property that is close to business parks and corporate districts and/or schools means that tenants will waste less time travelling to and from the places that they need to go. Because of this there is often high tenant demand in these areas which increases the rental yield and therefore increases the value of the property.
3. Local amenity and infrastructure
Walkability or café culture near a property can greatly impact the long-term value. Amenities nearby make a house feel like a home and a neighbourhood feel like a community. You should look for things like schools, hospitals, universities, public transport, parks, beach, local café strips, etc. Most people are more likely to buy or rent in an area where they feel they can quickly duck down to the shops or walk across the street to the local park and enjoy the green space.
4. High value land component in the purchase price
Land is a finite resource which usually means that it increases in value every year. In radial cities like Sydney and Melbourne where the CBDs are in the centre, generally the most expensive land is closer to the CBD. Buying an older house that might need a bit of DIY love is often better for capital growth if it comes along with a larger block of land. Houses can be knocked down and rebuilt, but land cannot be made new.
5. Something special that makes it stand out from the pack
When you’re buying a property, you should look for points of uniqueness. What would make a buyer or renter want your property over any others nearby that may be similar? For example, a courtyard, extra car park, large floor plan, great natural light, north facing orientation or period features can all go a long way towards creating a desire for the property.
If you’re keen to land your first (or your next!) investment property, keeping these handy tips in mind can go a long way towards adding the right investment to your portfolio.
Credabl has successfully helped doctors, dentists and vets across Australia secure properties, while offering loans customise to meet individual needs. Contact a member of our residential mortgages team to find out what we can do for you.
Ying Chan has been a buyers advocate in Melbourne for over seven years. She has helped many doctors acquire properties to live in or as investment properties. Ying opened her business Eclipse Property, after six years with a leading Melbourne property advisory firm.
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