Over 24 years, we’ve been professionally investing in Residential Real Estate for clients. Purchasing both individual investments and building and managing large, profitable portfolios.
To date, we have purchased over $3 billion worth of real estate investments, and have been long-term Residential Property Managers to a substantial portfolio of rental properties.
Drawing on our professional expertise and years of experience, we’re sharing our best advice to investors in the Residential Real Estate Markets of Sydney, the Gold Coast & Northern NSW. Here’s our guide to investing in Residential Real Estate:
1. Establish your financial strategy
Do you need positive cashflow for yield/income? Or are you targeting capital growth?
As a rule, the higher the yield the lower the growth. It’s important to get independent financial advice if you’re at all unsure.
In our experience – forming your strategy around total return, subject to where you are in your property cycle, is the best approach. This means a mixture capital growth and yield, with some depreciation where possible.
2. Be Asset Driven – Value vs. Price
The price of a property is what you pay – or can pay, it’s not to be confused with its value. The value of a real estate asset is both personal and how it fits into your long-term strategy – whether it’s a home for you or loved ones or a part of your wealth creation plan. What drives a real estate asset’s performance and value is ultimately future buyer demand. So investing in what people want more of will support value and stronger growth.
When investing in real estate, prioritise value and always be asset driven. Scarcity drives value, so, where possible, it’s better to stretch your budget to buy a superior, rarer, more desirable asset today. It’ll both pay off in the short-term through stronger rental returns and decreased vacancy, and in the mid to long-term with higher capital growth – and therefore value at time of sale or as leverage to add to your portfolio.
In Sydney, it’s still possible to buy something highly desirable even with a budget below $1 million. Just focus on assets with the right fundamentals.
3. Understand your target market
It’s a good idea to consider your potential tenants and future buyers in your initial purchase. Who are your target tenancy demographic and what does your ideal buyer profile look like?
Different tenancy demographics can impact your ongoing maintenance costs, tenancy turnover, advertising costs, rental returns and rental stability. It’s better to consider these things before the fact, rather than deal with the financial impact of them after they exist.
Equally, when you find yourself wanting or needing to sell your property, it’s important to consider who your ideal buyer is. You want to make sure you end up with a property that keeps pace with or outperforms the market. The property market is driven by people’s needs, so it’s vital to keep this front-of-mind.
Think about who’s renting or buying your asset in the future and try to understand and meet their potential needs. This will help you find the best property today.
4. Finding the right sort of property
Finding and securing the right property for your budget and needs is the hardest and most important part of the investing process. It can be the difference between minimal or extended vacancy between tenancies. It can also impact growth and your ongoing cost of ownership.
We advise buyers familiarise themselves with the fundamentals of a good investment. Particularly on getting the biggest property possible for your budget. Also, to give a strong preference to properties with parking and/or proximity to city transport.
Always buy in lower density areas with good amenity. Target locations where there are high barriers to entry for over-development.
Lastly and importantly, prioritise quality – look for optimal floorplans, natural light and ideal aspect.
For more detail on what makes a good investment property, you can refer to our guide.
As always, if you could use personalised guidance and expertise on your next purchase in Sydney, the Gold Coast or Northern NSW markets, get in touch with us today.
