Melbourne is one of the most desirable and liveable cities in the world. It has a diverse, multicultural society that is welcoming to all people. Thus, the property market in the area has been strong over the past decade. Apart from the property prices, the rental income therein has also been rapidly increasing.
Consider the following graph, for instance. It shows the quarterly Rent Price Index in Australia from Q2 of 2018 to Q3 of 2022. It shows that while COVID-19 did impact the index slightly, the overall trend continued to increase – even more so than original projections in 2018!
Because of this, real estate has become one of the prime areas of investment for investors seeking wealth and a continuous rental income. Furthermore, the graph shows that property investment in Australia remains a safe asset class in the long term.
In this article, we will take a closer look at some of the best tips for successful property investments. We will also look at some major considerations that property investment advisors recommend when seeking a safe investment for the long term.
Key Property Investment Tips to Invest Successfully
Here are some key strategies to keep in mind when looking to invest in property, be it in Melbourne or anywhere else in Australia.
Understand the Market First
Knowledge is power, which is why it’s important to understand how to invest your money in the best way possible. The property market in Melbourne isn’t the toughest out there, but it is definitely one of the more difficult ones to navigate if you don’t know what you are doing.
Here is an overview of the median value of residential houses in different Australian property markets (Q4 2022) to consider.
The graph shows that the Melbourne median is the third-toughest to navigate. Furthermore, there are several tax implications to consider, property management, and other maintenance and value improvement know-how that you should familiarize yourself with before investing. Knowing all this will help you make informed decisions as the market forces “do their thing.”
This is where property investment managers come in handy if you are looking o get the most out of your investment without getting your hands dirty.
Familiarize Yourself With the Market & Predict Trends Accordingly
The real estate market is constantly changing. It is important to be aware of the current trends and changes in the market so that you can make informed decisions about your investments.
There are many factors that have an effect on the real estate market, including economic factors such as inflation and interest rates, demographic changes (such as population growth), technological innovations (such as new building materials), and natural disasters.
Long-Term Usually Pays Off Better Than Short Term
Short-term investments are usually riskier, but they often have a higher return. Long-term investments are less risky, but they usually have a lower return. This is because short-term investments are based on speculation, while long term ones are based on fundamentals.
Money now may seem more alluring than money later, but would you rather get a $250 benefit now or a $250,000 benefit a few years down the line? In 2016, the Home Value Index in Melbourne stood at $560,000, which rose to $736,000 in 2021. In 2022, this value is expected to go over $800,000.
When Searching for a Property, Go for One With a Positive Cash Flow
Cash flow is the net income that a property generates. It is the difference between the cash that comes into a property and the cash that goes out.
The cash flow from a property can be positive or negative, depending on its expenses and income. This concept is very important for investors because it allows them to make an informed decision about whether or not they should invest in a certain property.
For instance, if you are considering investing in two properties, one with a positive cash flow of $400 per month and another with a negative cash flow of $600 per month, you should invest in the first one because it will generate more money for you over time.
Take an Organised Approach to Your Property Portfolio
The property market is constantly changing. It’s important to stay on top of the latest market trends, economic conditions, and government policies that can affect your investment. It’s also important to keep in mind what you are looking for in a property investment and take an organized approach to your portfolio.
Property advisors are a team of professionals that work together to create a great customer experience for both the owner and tenant. They offer advice on how to organize, manage, and market your property portfolio to make it more attractive to potential buyers.
The team usually consists of a property manager, leasing agent, accountant, lawyer, architect/designer, and marketing specialist. They provide services such as tenant screening and credit checks, lease negotiation services, rent collection services, maintenance, and repair service management, etc.
They help you make informed decisions about your property portfolio and can be an invaluable asset in your hunt for safe asset investments. Not only do these advisors help you maintain and manage your property effectively, but they also recommend action, i.e., when to sell and when to buy, from time to time.
This allows you to stay ahead of the market, diversify your portfolio effectively, and in essence, improve the overall value you get from your investment – now and in the future.
Final Words
In conclusion, having property investment advisors on your back can be a particularly helpful investment on your part as they will be able to advise you on the best asset class for your needs. Whether you are looking to earn rental income, improve portfolio value by an asset price increase, or simply interested in growing your portfolio further, they are able to see the different risks and rewards associated with each of your investments.
