Seven investor tips for a booming market

Institutional investment in property often serves as a significant driver in real estate markets.

Housing prices can reach new heights during certain periods. Values are typically influenced by factors like interest rates and institutional investor activity.

Large numbers of properties may be acquired by institutional investors in active markets, while mortgage rates continue to play a role in buying decisions. While this can create upward price pressure, it’s also often seen as a vote of confidence in property as an investment.

Market trends can present opportunities for various stakeholders, but it’s important to note that national statistics may not accurately reflect conditions in specific neighborhoods or regions.

Real estate associations often report on shifting sales patterns and new construction starts – factors that can influence market dynamics.

All investments carry inherent risks, but real estate has historically been viewed as a solid long-term investment option, even in the face of market fluctuations.

With potential opportunities in mind, here are seven tips for first-time property investors to consider. These points also serve as a reminder of key principles for those more experienced in real estate investing.

  1. Define a strategy – Understand the level of investment you are comfortable making and your ultimate long-term approach. Are you going to put a lot of time into this project, or is it a sideline for you?
  2. Do your sums – Rental income doesn’t necessarily cover all your expenses. It’s best to talk to a professional financial adviser to assess your capacity for property investment.
  3. Where to start – If you’ve never invested before, it’s a good idea to begin with residential property. The trends and values are easier to understand than those of the commercial sector. Once you’ve become confident, there’s nothing to stop you from diversifying your portfolio.
  4. Do your research – This is a critical discipline in property investment. Check out price trends and rental vacancies in your target neighborhoods.
  5. Know what rents – It’s not enough to buy any property. Your investment should meet the market demand of renters.
  6. Worst house, best street – This is a cliché that references where you’ll likely find the best capital gain. You can always renovate an apartment or house, but not the street.
  7. Don’t prioritize your tax strategy – Making a loss on a property to pay less tax on other income shouldn’t underpin your approach. If rental income doesn’t cover all your expenses, you should be satisfied the likely capital gain on the property will keep you in the black.