Welcome to CoreLogic’s housing market update for December 2023.
A lucrative property investment is one that outperforms the market in capital growth. And, as John McGrath, CEO of McGrath Estate Agents says, while yield is important, the serious windfall comes when you identify a hyper-growth area through solid research, observation and calculated risk. “Imagine if you’d bought a couple of Paddington terraces in Sydney […]
A lucrative property investment is one that outperforms the market in capital growth. And, as John McGrath, CEO of McGrath Estate Agents says, while yield is important, the serious windfall comes when you identify a hyper-growth area through solid research, observation and calculated risk.
“Imagine if you’d bought a couple of Paddington terraces in Sydney in the 1970s and held them until today,” explains McGrath by way of example. “Very few ‘astute buyers’ wanted to touch the area in the 1970s. So look around and try to unearth the next Paddington. Generally, property within a 10km radius of a major CBD or close to city beaches (10km to15km from the CBD) will yield the greatest growth so try to find areas that are relatively unwanted and have signs of growth [in that zone].”
Along with location, look for areas with a village feel near cultural assets (universities, galleries, historical precincts, grand period homes), notes McGrath. And when the research box ticking is done? Go with your gut instinct and be prepared to take a calculated risk, he advises.
Definitely do your research first. Chris Gray, founder of Empire, swears by this. His business buys and renovates properties on behalf of high-income clients, and he has personal experience snapping up real estate, as well. Gray transformed $35,000 into a $3.5 million property portfolio in under nine years, allowing him to retire from full-time work at the age of 31. Given a particularly high proportion of small businesses face tough financial times during their first five years of operation, a backup plan in the form of bricks-and-mortar investment can help circumvent business volatility, says Gray. “As the properties increase in value, the equity can be used to buy more property or you can inject it into the business to help it expand.”
Gray’s tips to build wealth through property are:
When weighing up where to buy real estate for an investment, Gray says there are two choices:
If you’re exploring the idea of building a property portfolio but have limited knowledge, Gray suggests hiring a professional to source the properties and handle any refurbishments can be money well spent. “Hiring professionals may cost you some money initially but will make you more money in the long term as the professionals can buy better investments for less and add more value with skilled trades people.”
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