What Makes it an Investment Grade Property?
“Any property can become an investment property. But not all property can be called good investments.” This saying is very much real. Currently, there are 10 million dwellings in Australia, and on any given day, 250,000 of these are for sale. As a property investment Advisor, we know that only 5% of those are actual investment grade. So what makes it the best investment property in Melbourne?
Investment-grade property is a term used to describe property felt to be of sufficient size and quality to be an attractive purchase target by one of the large institutional portfolios, such as retirement funds or insurance companies. It means that anyone can buy a house, put a tenant in their to live, and instantly become a rental property investor; however, without proper guidance and research from a property investment advisor, you could end up with a property investment that drains your pockets more than filling them.
Understanding the Local Property Market
Here in Melbourne, the property market remains stronger and is one of the most consistent performers ever. We have seen how it peaked in 2019 and quickly recovered after it fell in mid-2019. But of course now with the whole coronavirus pandemic, we have seen how the property market fell as shutdowns caused a high level of unemployment and gave way to low consumer confidence.
It remains to be seen, though, what the future of Melbourne properties will look like after these unprecedented times. But with that in mind, it does not necessarily mean that property market values will plummet. Since there is no transaction occurring during this time, there are no reasons for the property value to collapse. The real estate market will indeed slow down, but once lockdown has been lifted, it will undoubtedly go back into activity again.
Even with low consumer confidence, there would still be investors who are ready to invest, especially those who have prepared a good investment property strategy during these uncertain times. If you are thinking of investing during economic climates such as this, you can have a property investment advisor guide you on what strategy you take.
Here are some of the characteristics we value as investment-grade properties versus the rest of the properties we do not necessarily choose for our clients.
As cliché as it sounds, it all begins with location. It is very critical in looking to find the best property investment.
Whenever we source the best property investment in Melbourne, we always take in the location as a significant consideration. We make sure that our client’s property will be in an area close to schools, and even just a few distances away from lifestyle centers like parks, shops, cafes, and restaurants. We also consider public transportation as this is something we can see will become more critical as the population continues to grow, with roads becoming more congested; people will want to think more about their commute.
It pays to know what you want precisely in a property, and understand the things that are important for you for us to better help you choose the best investment out there.
We also look for properties in areas with growth corridors, wherein the government spends money on new infrastructures or newer regions where there is a potential for these to grow.
All of this is so you can ensure that there are consistent historical growth and a crucial scarcity factor. It is also well to consider that size of your property should not matter as long as it is a suitable block in a high growth area.
Good Cash Flow
Investment properties are assets, and with it should produce a regular income stream, just as Robert Kiyosaki says, “an asset is defined as something that generates an income.” Investment-grade properties offer a steady cash flow by having consistently high demand and low vacancy rates. There is no use if the appraisal is high, but the vacancy rate is also high.
This is something we also consider as your property investment advisor. We make sure that the area where your property will be has a good demand for rentals. This will ensure that your property is not left for too long throughout those 12 months without an income coming through. We also only source properties in areas that have a vacancy rate of less than 2%.
Cash flow is the ultimate goal in any property investment strategy. But without considering all of the factors we have pointed out, your property would just become an investment property but not an investment-grade one.
A strong history of capital growth
Not a lot of people will agree, but this is one of the most important things to consider when looking for an investment-grade property. Capital growth is the main reason why so many investors choose properties or real estate to invest in rather than the other asset classes. Of course, there is also that little fact that it is also safer compared to others. With the increasing rate of population growth, the demand for property is continuing to grow at a faster rate than the supply.
Income is essential; however, for an investor to truly grow wealthy from property investments, you must have capital growth. And our investors will understand this factor as we mentor them the miracle of continuous growth. And it in the value of investments over time will yield vast financial achievements.
While there is no shortage of property markets over the last few years, we have seen it slow down. And if you look at it closely, there is a shortage of real quality investment grade ones. But it doesn’t mean that you will have a hard time looking for one.
Best Investment Property in Melbourne
Apart from the factors to consider above, you can also use this guide questionnaire before considering investing in a property:
- Is the property in the right location?
- Does the property you’ll be purchasing have strong demand and a lower vacancy rate?
- Is the location secure and have a useful security feature?
- Will it increase in value?
- Does the property suit your investment strategy?
These are guide questions and won’t give you an expert answer about investing in real estate. If you want to receive accurate information about the property you wish to invest in, you can ask one of our property investment advisers to help you come up with a purchase decision. Our team of experts can guide you in achieving your investment goals.
Property Investment Advisor
Here at Logic Property Group, we are more than happy to help you find an investment-grade property to start your property investment journey. We have a research team that looks at many aspects of the property market to ensure that we find the best estate for our clients. With the help of our property investment advisors and mentors, and along with our panel of partners, you can be assured that whatever property investment you have decided to purchase will be an investment-grade one. Call us at 1300-LOGICG (564424) or send us a message now.
The information on this post/video is of a general nature. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.