The Astute Investor Market

The Astute Investor Market continues to retain an appetite for residential property, particularly the Buy-to-let Investor.

In good times and bad, investment in real estate has proven difficult  to beat on almost any measure. Long term investors in quality real  estate have been well rewarded. Returns on residential property have two  elements, a capital growth portion which over the years has comfortably  outstripped inflation and, for investors rather than owner occupiers, a  rental component which is also normally inflation proof.

But, what really contributes to the intrinsic value of a property,  assuring the owner of future good returns when they wish to sell the  property, or rent it out for a sound monthly income?

The astute investor market continues to retain an appetite for  residential property, particularly the buy-to-let investor. Their  purchase decisions are carefully considered on the basis of price,  location, features and importantly, yield potential. Multiple housing  projects under sectional title can result in investors achieving  extremely sound returns, driven by those who understand the ultimate  value of buying into a preferred housing well-run schemes with excellent  communal facilities and the potential to rent out apartments and  townhouses easily due to their broad appeal. This makes good sense as  new developments in well established areas are attracting like-minded  people on the basis of lifestyle and convenience regarding access to  major routes, the workplace, good schools, amenities, and shopping and  leisure facilities.

It is logical that location plays a major role in the buying  decision, Given that the smallest, average property in a sought after  area is likely to increase in value at the same rate as the other  properties demonstrates the fact that location and price appreciation go  hand in hand.

What adds value to a property?

In family-oriented suburbs that consist predominantly of family  homes, proximity to good schools, shopping centres and public transport  and/or arterial roads are important, it is an advantage to be out of  sight and sound of arterial roads and away from the hustle and bustle of  retail centres.

Generally speaking, the adage still applies – it is better to have a  shack in a good position than a palace in a poor one. Also, security and  sufficient covered or at least secure parking is important everywhere.

Investment properties are popular in established areas where rental  demands for apartments are high. Rental returns are highest at the lower  end of the market – percentage wise, decreasing with increasing  property value. If you are growing a portfolio of properties then having  more, smaller properties versus fewer, larger properties spreads the  risks and will increase the rate of rental return, although not  necessarily capital growth. Bear in mind that young working or  professional singles and couples and those at the other end of the  spectrum who are scaling down often opt for easy, low maintenance,  secure city living for the ambiance and style as much as the convenience  and security. As an investor it’s important to do one’s homework and  decide what you want.

Right price is key

It is very important to acquire the right property at the right price  in the right address, first consider the type of property that involves  lower maintenance, such as a cluster home or a sectional title  development. The right price is very important as every cent spent over  the market price will need to be recovered over time and this can eat  into a potentially rewarding investment. Avoid an emotional purchase and  look at the facts and return. Remember, although a property may look  discounted and may offer a good deal if it is in the wrong location it  may never be as rewarding financially and it may also be more difficult to  find a tenant. Also consider good security and good access to public  transport and highways.