Who wouldn’t like to see into the future?
On balance, I think it’d be bloody spectacular. Apart from those wondrous surprise moments that accompany unexpected good times with friends and family, it would be very cool to have the unfair advantage of knowing what’s coming down the road.
What’s the best school for your kids? Check your crystal ball and see where they’ll be happiest.
What undiscovered holiday hot spot is bound to be overrun by a tourism juggernaut? Get there early and enjoy its unspoiled beauty before everyone ruins it.
Should I buy tickets to the grand final? Seek ahead and see if your team makes the grade.
And then there’s property investing. Imagine the ability to know in advance what locations, property types and price points will maximise your returns. You would move fearlessly into your investment strategy, confident that success sits just around the corner.
Well – I can’t promise you a magic mirror that will reveal all, but I can divulge a way to make your future self very happy about the real estate decisions you make now.
Property Plan Advantage
The first step will obviously be to layout your investment journey in advance. By running through your goals, dreams and desired, and matching them with your financial resources and personal resilience, you’ll be able to put a strategy in place to head in the right direction.
Your plan should help keep you on the path, but also provide enough flexibility when needed.
One of the great things about real estate is there are already heaps of resources available to investors that can help mitigate risks and boost potential upsides. We have town plans, sales histories, overhead mapping, building guidelines – all sort of info that can make us among the best-informed participants of any investment vehicle.
The Golden Rule
Now you’ve got your plan in place and your resources on hand, here what I think you need to do to maximise long-term success.
I’ve spoken before about the evolution of the investor, but I also believe in the evolution of the investment too.
As you accumulate property on your portfolio, you’ll have investment parameters set by your current circumstances. In the initial stages, you will be restricted by your available household income and finance approval level. You might also be tethered to a property type or particular locations.
Here’s where I believe challenges can be opportunities.
Use these restrictions to your advantage. If you can only afford to purchase in the lower price, high-yield outer suburbs of a metropolitan centres, then do it – but add a twist.
Every suburb offers a variety of properties with different strengths and weaknesses. Look specifically for those that offer you options in the future to boost their value.
A Few Examples
There are plenty of ways you can angle-shoot a property. Here are a few I’ve come across.
- If you’re buying a second-hand unit in a traditional 1970’s three-story walk up complex, pay attention to the size of the parent lot and the current zoning. The unit might be affordable – yes – but did you realise that with enough land area and frontage there’s a possibility a future developer will be keen to acquire the entire unit block at a premium?
- If you’re not sold on the idea of appealing to a developer, I’ve even heard of body corporates who’ve banded together and built an additional unit on their underutilised common area. It’s not a crazy idea and the end profits can be substantial, particularly if there are only six or so owners.
- Duplex and triplex investment is great but have a look at the local authority’s town plan. Is there a chance that you might be able to strata and split the units to create even greater returns in the future? You have the upside of high rental yield while you wait for the market to rise too.
- Old homes on decent size block can be very price effective, however pay close attention to the neighbouring properties. How long have the owners been there? Are there demolition controls in place? There’s every chance you might get an opportunity to acquire the adjoining property sometime in the next decade or so and, hey presto, you’ve got a development site.
So, do something your future-self will thank you for. Keep your eyes open for an angle. Look for ways to ensure the holding you buy now will become one of your most profitable ventures in the future, simply because you took some time to gaze into the distance and explore the possibilities.