investing-vs-buyingBuying your first property is both a daunting and exciting process, as it’s usually the one that you’ll make your home for a considerable length of time.

Your first home purchase will no doubt be an enormous learning curve for you. You’ll have to battle with real estate agents, banks and mortgage providers. You’ll be putting every spare dollar away in an attempt to pick up a deposit.

As a result, it’s common to assume that the average homebuyer is sufficiently educated and prepared to start property investing. Sadly, this is often far from the case.

Key differences

The main point is that investing in real estate couldn’t be more different than buying a home. When you buy a home, you’re seeking a property that has suitable amenities and facilities to keep you satisfied. They also have to be within your budget.

With an investment property, it’s essentially the opposite. Property investment is all about finding those homes in high demand that are difficult to locate and will rise in value quickly.

The only opinion that matters when purchasing an investment property is that of the marketplace, both presently and in the future, too. It’s this balance of opinions within the market that will ultimately decide whether your property will increase or decrease in value.

Any smart investor never lets personal opinion interfere with a property purchase – it’s all left to the opinions of the market.

Questions you should be asking

When considering property investment, there are several questions you should ask yourself to test your knowledge and commitment:

  • What’s my motivation for buying a property?
  • Do I have a financial or personal objective?
  • What do I want from this property?
  • How will this investment affect my present and future financial situation?

If your answers are all based around generating financial gain, then invest in a property that meets your core financial objectives.

Which properties fit the requirements?

The property you’re aiming for is one that’s in high demand, short supply and will increase in value quickly as a result.

Here’s what we think. During your investment cycle, properties that are within inner-city suburbs tend to increase in price at a solid rate. If you have the investment capital spare, this is the location you should be aiming for.

Naturally, there are going to be peaks and troughs in properties within the outer suburbs and regional areas of Australia, but logic dictates that the highest demand will be within the busiest and most population-dense suburbs. Those that are close to amenities such as public transport, schools and shopping facilities will be particularly sought-after.

To cover the supply aspect, you need to be looking for the most in-demand property types – those that aren’t being built any more. When considering houses, these will be Victorian or Edwardian era properties dating from the 1930’s to 1940’s.

If you’re after apartments, keep an eye out for any dating between 1920-1970. Art deco architecture is always in huge demand, so it’ll be a valuable investment.

It’s easy to fall in love with a property, so leaving your emotions out of the mix is often easier to say than actually do. If you’re in doubt, you should consult an independent advisor and get their opinion on your purchase.

The information and links provided on this website are for general information only and should not be taken as constituting professional advice. This information does not take into account the financial situation or particular needs of individual readers. Before making any decisions about matters discussed on this website, you should consider whether it is suitable for you in light of your own circumstances, and seek appropriate advice.