July 1st heralds opportunity for first time property investors

The start of the new financial year beginning on July 1^st, should see a flood of first time investors entering the Western Australian property market according to Shane Kempton, CEO of Professionals Real Estate Group.
“With interest rates are now record lows and property prices still relatively affordable in many parts of the State, now is a great time to buy an investment property.”
“Professionals historically finds that during July, August and September there is a surge of activity in the property investor market mainly driven by people buying an investment property for the first time.
“Generally, taxpayers visit their accountant in July and after that decide to buy an investment purpose to take advantage of the taxation benefits associated with owning a property. However, these first time investors should focus on the real benefits of owning property which is the personal wealth it can create through capital appreciation over the long term.”
“For example, in a large number of Perth suburbs of the last year the median house price jumped in excess of 10% which is twice the annual interest costs of an average mortgage. When rental returns are included, then buying property represents a great way to create wealth especially for young people. With the Federal Government now extending the age of pension qualification, property represents a low risk way for young people to invest for their retirement years,” he said
Mr Kempton offered the following tips to first time investors:

• Use the R.C.C location rule when buying an investment property. It should be located either near the River, Coast or City. Properties in these areas generally have demonstrated higher rates of capital growth and rental returns.
• Begin your property portfolio by purchasing a well located property for less than $500,000. Buying a lower priced property will give you good experience while at same time not financially over committing yourself. You can start by buying a smaller property in a high capital growth suburb such as an older home unit located near the river or close to the beach.
• Consider the land content of the investment property rather than the structure of the home. It is important to remember that land appreciates in value and the buildings depreciate in value. A property which has a land content of more than 75% has a greater chance of appreciating at a higher rate than a property where most of the value of the property is in the building.
• The block size of the property is also important. The larger the block the greater the potential the property has for future subdivision which will significantly increase the value of the property. You should check with the local Council to ascertain any future changes to land zoning which might allow the opportunity for higher density homes.
• Consider buying a property where there is a broad range of property owners rather than just investors. For example, if the area has a significant number of owner occupied homes it means that the potential pool of people wanting to buy your investment property in the future will be much higher than a property that just appeals to investors.
• Rental income is a key factor when choosing an investment property. Your property should be located close to schools, shops and transport to attract the highest number of tenants.
• Always work towards a strategy of buying several investment properties rather than just one or two. Through owning several investment properties, you can create significant amounts of personal wealth. To achieve this outcome, put in place a long term strategy and stick to it.