Invest long term for better profit

Good property investment is about choosing properties for big-picture goals and catering to the market, according to property experts.

“Property has very high entry and exit costs, which can often hinder your ability to make short- term gains when buying and selling. And unless you are an expert in the field or know a market inside out, then it can be very difficult to make short-term money through property investment, ” Propell National Valuers property adviser Will Hosking said.

“This is the reason why, for most investors, property should be viewed as a long-term investment because it enables the compound growth effect and leverage to wash out the high entry and exit costs.”

Mr Hosking said investors needed to decide if they were targeting yield or growth, or a combination of both, as different goals changed what types of properties and areas they should target.

Investors should look for areas with a diverse range of industry to ensure future employment and population growth.

“It can be very risky investing in areas that are solely supported by one or two major industries, such as mining towns, ” Mr Hosking said. “When it comes to targeting a pocket or micro area within a city or larger metro area, focus on pockets and streets that have good access to amenity and transport.

“Ideally you want to focus on an area that has, and will have in the future, maximum demand from owner-occupiers and tenants and that has very little future supply of virgin land.”

Mr Hosking said if investors decided to buy units, they should focus on small, boutique complexes with character and unique appeal not big “complexes with 50-100 units that are all homogenous and predominantly owned by investors”.

Ausnet chairman Jon Adams said investors needed to inject money into upgrading their rentals because tenants were becoming more selective in the high vacancy rate market.

“When considering rental returns, landlords should understand that anyone who invests in residential property is not just investing in bricks and mortar but also the lifestyles of West Australians, ” he said. “Lifestyle issues are impacting on the expectations people want from a home, whether they are renting or buying, and people are increasingly demanding a higher level of fit-outs for rental properties and are willing to pay a higher rent for them.”

Key lifestyle features in demand included security, air-conditioning and dishwashers, and a property with these three features could often command an extra $30 per week.

“Ensuring your property is well secured and has additional features such as a reverse-cycle air-conditioner means the home will attract a higher number of prospective tenants, ” Mr Adams said. “This is particularly important during a time of higher vacancy rates and will ensure your property is less likely to remain vacant.”

Investors should also ensure their property is properly maintained over the longer term.