How To Make 11% A Year On Your Investment Property

By Author: Ian Comnys
Total Articles: 39
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With a 'soft' market and an economic downturn touted to soon occur, it could be a good time to invest in the property market.

Many self-made millionaires and savvy investors will tell you that it's during downturns that the best opportunities arise. Real estate has long been recognised as a solid investment, and the current market offers some of the best buying opportunities that Australia has experienced since the 1990s.

So if you've been thinking about making more investments in the property market, then do it now, before the opportunity is lost.

Why now's the time to buy.
Speaking at the 2011 Aussie Sales Conference in Melbourne this month, BT Financial chief economist Chris Caton said investors always enjoy greater returns on their properties when the market is soft.

"Data shows that the best time to invest in property is when prices are softening, which is right now," he told the conference. "If you invest in the property market during a downturn, research shows investors will make 11.4% every year on top of their property price."

"However, the ...
... story is quite different during a market upswing. Investors that buy property when the market is running hot only see a 2.8% gain per year."

While each state and suburb will have slightly differing market conditions, there are some constant market factors that are apparent in cities and regional centres around the country:
• Rents are up
• Sale prices are down
• The number of sales being generated are down.
• There are fewer first home buyers entering the market.
• Finance is harder to obtain, loan approvals are down
• Buyers are negotiating hard on the price when buying a property.
• Properties are taking longer to sell.
• The economy is tight and the cost of living is rising.
• People are under financial pressure.
• Affordable rental housing is in demand.

Investing in a down market
While weakness in the real estate market has reduced property prices, finding a bargain still requires research and a businesslike approach by investors. Although data indicates that properties on the market in the inner-west are cheaper now than they were at the end of 2010, the competition for these properties is still strong. Here are a few tips from inner-west property management firm Exchange Property Sales and Management for investing in a down market.
• Keep a keen eye on the market: Generally speaking, the longer a property is on the market, the keener the vendor is to sell. Investors and other buyers alike should be constantly monitoring the houses they're interested in, and when they see prices falling, that's the time to get in and buy.

• Do your research: The easiest and best way to get a bargain investment is by searching recently sold, comparable properties and knowing exactly what a bargain is. Reasonable sellers know that they must price their properties similarly to other comparable properties on the market if they want to be competitive. Knowing the market like the back of your hand will ensure that you know what the best price for a property is.

• Ask why the property's for sale: It's a good idea to discover why a property's for sale. The owners might be relocating and so it could be a lot easier to negotiate a good price than if they're just testing the market.

• Use the down market to your advantage: It's pretty obvious that you're more likely to get a bargain in a down market then when the market is looking up. Use the down market to your advantage by seeking out terms and conditions from a vendor that you'd never be able to extract when the market is good. You might find that a seller, if under duress, will agree to a very extended settlement if the price is sweet enough.

To assist investment property owners and home-buyers to negotiate the best price for a property, Exchange Property Sales and Management has published a Free Property Investor Handbook.

The handbook can be download for free from the Exchange Property website.

About Exchange Property Sales and Management
Exchange Property Sales and Management is an integrated real estate sales and property management agency specializing in Sydney’s inner west. It achieves great sales prices through the application of its five-step sales plan, on-time rents through its energetic attention to detail.

The team at Exchange Property Sales and Management are experts in maximizing a property’s sales or leasing potential, as well as finding that perfect new home to buy or rent.

Contact Exchange Property Sales and Management on (02) 9146 5324.

Ian Comnys is the owner and Director of Exchange property, Exchange property sales & management is a Sydney based property management company helping you in selling your home or renting out a property in Sydney's inner west.