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January 30th, 2015 | Media Statement
The basic human need for housing all but guarantees that investing in bricks and mortar will continue to be a popular method of wealth creation. However for potential investors on a low income, the property market can be daunting, according to Perth-based buyer’s agency, Property Wizards.
Liz Sterzel, managing director of Property Wizards said that there are still strategies that these investors can utilise to build their wealth.
“The number one thing for investors to remember is that creating and accumulating wealth in property comes down to the time spent in the market,” she said.
“Successful investment is about getting the right property at the right price and in the right location and then holding on to it or adding value.”
RENOVATE OR DETONATE TO CREATE WEALTH
If you’re looking to secure a winning investment in a hurry, a property with the potential to ‘add value’ either through development or renovation is without a doubt one of the best options, said Ms. Sterzel.
“Sometimes you can get into a low priced home and boost its value through subdivision, renovation or refurbishment,” she said.
“While the costs of carrying out a small development might push the subdivision option out of reach of many low-income investors, if done carefully home renovation can rapidly boost cash flow and improve the quality of potential tenants.
“However it can be easy to overcapitalise on renovations, and it is critical that the investor does comprehensive research and sticks to their budget.
“A good way to update an investment property’s look quickly and cost-effectively is to look for worn or unattractive features that can be easily fixed, such as floor coverings and light fittings.
“Keep renovations simple and watch out for costly works, such as hidden rewiring or plumbing, that don’t add any appreciable value to the property.”
LOOK FURTHER AFIELD
Ms. Sterzel also notes that low-income investors may need to look to the outer suburbs to find a suitable investment as the inner suburbs and traditional hot-spots move out of reach.
“Targeting properties further from the city, but with easy access to shops, transport hubs, parks and entertainment options which appeal to tenants can be an effective way to get your foot in the door with property investing,” she said.
“In most capital cities, houses near the CBD are almost out of reach of the average investor.
“Investors who are willing to look further afield will generally find more options in terms of houses suitable for adding value, or with the additional potential of proposed rezoning.”
She said that historically Perth suburbs in the earlier stages of proposed rezoning have enjoyed relatively stable, comparatively lower prices to suburbs already zoned for development.
“However, as the proposed rezoning creeps closer to coming into effect, demand increases rapidly, dragging up property values with it.
“If you are able to purchase a property to buy and hold in one of these potential rezoning areas, you have the opportunity to either hold until your equity allows you to carry out the development yourself, or bank the land to sell to a developer when the market has lifted.”
Ms. Sterzel said that no matter what your income, being patient and having a carefully considered investment plan is vital.
“Looking to ‘get rich quick’ is a gamble, while effective property investment is not a gamble.
Investors should seek professional advice to help clarify their property investment goals and determine which strategies will work with their finances.”