This is a question we frequently get asked, but ultimately you have to consider what is best for you, what your long-term strategy is and ask yourself a couple of questions.
Do You Want A Rental With A High Return?
Unless you have a lot of equity, positively geared properties are far and few between – generally you have to purchase in a mining town where when things are going great you get fantastic growth and great returns. However when there is a down turn, things can go bad extremely quickly.
Just look at some local towns in our region where rents have halved or worse in the past 12 months. In North Queensland and Western Australia sale prices have plummeted in some regions.
Generally property is not a get-rich-quick form of investment. Even if your property is negatively geared for a while, you will be reaping the tax deductible benefits and eventually, depending on what you decide to do, you will reduce the mortgage and enjoy some additional income.
Do You Want Long-term Growth?
Investing in property is generally a long-term commitment. While Sydney may see massive increases of up to 20 per cent rises in a year, it then undergoes a major correct when the price can also drop by just as much. The Newcastle region (which also incorporates Lake Macquarie), generally gives great small price increases that over a 5 – 10 year period, giving you an outstanding capital gain in most circumstances.
The key to good investing is for the investor to work out what is best for them. There are numerous types of investment, which include:
- Residential or Commercial
Generally residential is easier to rent as everyone needs to live somewhere, but you can be very successful with commercial property too.
- New or Old
An advantage of new properties is there are depreciation allowances, however, some people prefer to get an older property which has renovation potentials.
- Unit or House
There are advantages and disadvantages for both of these types of properties. Generally, a unit is less expensive than a house although it often has other ongoing costs such as strata fees.
- Families, Student or Single/Couples
There are many different types of tenant out there, so the type of property you’re after will depend on what tenant you’re trying to attract.
New suburb where land is plentiful or older suburb where vacant land is not and generally gets better capital growth. Also look at vacancy rates for the area you are considering purchasing in.
- A property that could have future development
For instance, if the property has a lot of land and can be subdivided at a later date.
Generally, there is no right or wrong answer when working out where to buy. Our advice is, talk to the experts, do your research and go with what you are most comfortable. From my experience, the most successful investor will spread their investment portfolio across several different types of property and different areas.
Too many people procrastinate looking for that “perfect” property. If you have done your finances and are ready to buy, come along and talk to us. Or even if you’re just interested in finding out more about property investment, our knowledgeable and experienced team can talk you through the process and tell you what to consider so you can make informed decisions.
We are one of Newcastle’s longest established real estate offices and have helped hundreds of property investors realise their dreams over the past 40 years, so give us a call on 02 4954 8833 or pop into our office for a chat.