I am formally qualified as a Financial Planner and apply these skills and practises to Investing in Real Estate. I have worked for a number of years with many of Australias bigger wealth creation and property investing groups and have provided countless people with property investing advise and education.
I follow the same processes as a financial planner would do if they were investigating investment options in shares or some other investment option. This process assess your needs and your risk rating. I can then take that information and match you to the right type of property to purchase that will achieve your goals,
The purpose of following a system like this is to reduce the risks that is associated with any form of investment. Whilst at the sane time refining the investment property criteria which results in you having the most suitable property to achieve your end requirements.
Step 1 is to Access Your Needs
Whenever I meet a client for the first time I apply financial planning practises to our initial meeting, something not many others do. The systems that have been implemented are designed to asses your current financial position, the level of risk you are comfortable with and what you want to achieve from the investment. At the same time we will be organising and assessment of your borrowing capacity which sets the budget for any purchase. This process is called a "Needs Analysis" and to be honest, anyone assisting people with real estate should have these basic skills.
Step 2 Where and What to Buy
The most successful and lowest risk option is to base your purchase in Distance to the Capital City. It is the oldest and most accurate measurement for property growth. You may find options where you can invest in a town that is looking promising and returns are strong but quite often these are sort term returns and carry a high level off risk. As close to the capital city is the best rule.
Step 3 is the Property Type
For the type of property you always have to consider the part of the investment that grows in value. It's not the property itself, it's the land and for that reason the majority of my purchases are houses. I will not look at units or townhouses unless we are constrained by budget. All capital cities face an over supply of both units and townhouses in the coming years and this will affect their value.
The most successful form of property investing comes from the land and the house. It is the land that appreciates in value! The house that is on it is there to generate an income for us.
My greatest successes come from sourcing the land myself and working with a very good builder to design a house that will maximise the value of the finished product and appeal to both investors and owner occupiers when it comes time to sell the home. I have many real life examples of this model being vcry successful. If you read my eight point selection process you will see that when applied to sourcing land, you can do very well.
The next form and the easiest to source is an established property. The secret here is to source that property in a suburb that is off the radar of the property investors. Any suburb that is being re[ported in the media is NOT the place for us to find a good property. The increased demand puts pressure on the local housing market and prices rise dramatically. We want to be in the suburb that is going to be in the media in the future, not now. Then we ride the wave of demand and receive a good boost in capital growth and our rental return will increase as well.