Property – it’s a veritable panacea for reaching any of your financial or lifestyle goals.
But not all property is created equally. Property comes in many different shapes and sizes, purposes and potentials.
The key is knowing what type of property asset is the smartest buy to align with your long-term goals.
In episode 26, we dissect “The different property types that you can spend your hard earned cash on”.
Listen as David Johnston, Cate Bakos and Peter Koulizos take you through the ins and outs of residential property, as well as the risks and rewards of commercial investment opportunities.
- Why the land-to-asset ratio of a property can determine its future price growth
- Land to asset ratio
- Why short-term investing has long-term consequences
- Why you need to plan for your future home when buying an investment property
- Making the first move – why the first property you buy is the most important of all
- The critical mistakes of property investment – starting without a plan
- House hunting is a compromise so target the most important factors
- The top 5 mistakes property investors make
- How our mortgage strategy helps us to hold properties
- Mortgage Strategy 101 – Ep 3. Holding Property
- Five mortgage strategies that can grow your wealth
- Why your approach and assessment of risk is paramount to property success! (Ep.10)
- How data can help property investors identify gentrification before it happens
- Property Cycle Management – why now is always the best time to buy if it suits your personal economy and you have a long-term property plan (Ep. 12)
- Why your Mortgage Strategy is more important than your interest rate! (Ep. 9 )
- Choosing whether to hold or sell investment property
- Questions to ask when buying an investment property
- How to succeed with Property and Create your Ideal Lifestyle
- Mortgage Strategy 101 – YouTube video series
- Residential property, the list is endless! Villa units, townhouses, period homes, high density, low density. But how do they each perform as assets?
- Be familiar with your local market – if you are purchasing interstate, a ‘villa unit’ may not be what you think it is?
- Villa units – often a good stepping stone homes, otherwise known as terraces, with 1, 2 or 3 bedrooms on the ground floor.
- Californian bungalows – built in the 1930’s – they can be partially weatherboard, big columns and veranda at the front
- Art deco – the beauty of art deco is that you can get any property type in this style – extending from two–bedroom apartments, semi-detached properties and fully stand alone homes.
- In Melbourne the epicenter of art deco is Elwood and St Kilda East. But be warned! These units can be plagued with company share titles. Art deco is characterized with an enormous master bedroom and the second room is tiny and useless. The separate dining room is often converted to create a second bedroom.
- Know which suburbs have a plethora of the style you’re aiming for – pace of growth over the years has meant that different suburbs have flourished at different times. Don’t expct to find any Victorian’s in Pascoe Vale and Reservoir.
- Morphing houses – how do you tell what style of property you’ve got? The reality is that many houses have been renovated over the years, not according to the original style. You may get a Victorian with some Edwardian features.
- Victorian houses – these are characterised by lace work, but not all properties will have cornicing and features in what used to be ‘blue colar’ suburbs.
- Edwardian – you can tell an Edwarian if the window is split into 3 upfront panes. They usually have timber work and higher pitched roof lines.
- Solid timber floors and a fire place are the mark of a period home.
- Double brick – fantastic for the climate, takes a few days to heat up, but once it does, it stays hot! These days most people have an air conditioner. What ever happened to sitting on the front porch?
- Townhouses – the 70s saw the advent of two story townhouses, better utilising land in the inner metropolitan area. The last census revealed that they are the largest growing property type.
- So what property type is best? It all comes down to your goals – are you aiming for cash flow, capital growth or a balance?
- Period homes – they have owner occupier appeals and scarcity value – being knocked down and rebuilt, they are only getting scarcer.
- If capital growth is your aim but your budget is for an apartment, remember the principles of land to asset ratio. In older boutique apartments, the land to asset ratio is still high. It will deliver capital growth, in nicer suburbs and many are in beautiful back streets.
- If rental yield is the way you want to go, you’re better off with an apartment, then a unit and then a house. It comes down to the land component.
- Now, onto the commercial – this includes retail, office and industrial.
- Industrial – the yield is best, because there is high risk of vacancy. If you lose a tenant, it will be a long time till you get another one.
- Retail – Technology has changed the way we do business, you don’t need to go to a bricks and mortar shop to purchase. This has made warehouses in higher demand, where you store the goods while people shop online and get delivery next day. Lttle shops are closing up or need a smaller foot print. The key attribute saving shopping centres are super markets – wich are still pretty secure unless online grocery shopping takes off. But many still want to see the food before they buy it.
- Rental yield potential – industrial – house 3%, townhouse 4%, flats 5%, retail 6%, office 7%, industrial 8%.
Cate Bakos – The Property Buyer’s Golden nugget: Being really mindful of cash flow is important because if you have a cash flow restriction, not comfortable spending $1000 a month in shortfall to cover costs of the property, then you are probably not looking at a house in capital city, if you are looking at that your out of pocket will be over $1,000 a month. You need something with stronger rental return, flat or unit and is not on its own full title
Peter Koulizos– The Property Professor’s Golden nugget: Short and sweet, thinking residential, the older the better, owner occ appeal, not building any more originals, and most of the building has depreciated meaning vast majority of the value is in the land.