Some Rules to Investing in Property

If you know what you looking for you can still make “serious money” in residential property, say property experts.“There is no more money for nothing and investors will have to relearn the traditional investment rules,” said Andrew Schaefer, MD of property management company, Trafalgar.

Reasonably priced properties (that are good value for money) are becoming more difficult to find and require a lot of legwork, adds Anton de Leeuw, CEO of YDL property educationalists.

Here are five golden rules to finding them:

Long-term investment. Property is traditionally a long-term investment and you should focus on building your wealth over decades, rather than months or years, reckoned Schaefer.If you take the long view and see property as a conservative, steady, income investment then short-term fluctuations in the market should not concern you too much, maintained de Leeuw.

Property players warn of get-rich-quick property schemes offering returns that are too good to be true. Income not capital growth. Concentrate on income rather than capital growth. “Having a piece of land is not wealth but having steady income from a portfolio of flats is,” he explained. Investors underestimate how important cash flow is - it is one of the most important rules, said De Leeuw.

Don’t rush. Slowly accumulate a low-risk portfolio reckons Schaefer. “The days are over when you could make quick money by buying off plan - prices aren’t rising by 30% a year anymore and you must take your time”, he added.

Specialise. Choose a niche and become an expert in it. Schaefer advises investors to choose a city suburb or even a street of shops and flats. “The property market is imperfect because information is not easily available so you can quickly dominate your chosen territory.”Educated investors will know that the property market is not one uniform mass of houses and buildings – it is made up of thousands of local markets, each with its own characteristics, maintained De Leeuw.

Bigger is not always better. A home with a big bond is not an investment, warns Schaefer. “People tend to buy bigger houses and take on bigger bonds as their jobs improve but this just means paying larger monthly instalments,” he said. It will make far more sense to live in a smaller house and invest in buy-to-let properties with tax-deductible bond payments, reckoned Schaefer. But, he added, you can use your house to a limited extent to raise a deposit to buy an investment property.

Fedruary update

Good morning CBD Investors

First interest rate cut, now a bit of tax relief for us coming out of the budget speech. The great news was an increased exemption for interest and dividend income with company tax was unchanged.

Our tenants do not seen to have felt the credit crunch yet. Demand has been fantastic so far this year.

Bridgeview – (220 units) was 95% let in just 2 months, it is great to see how the efforts to clean up town are paying off.

Broadway – (140 units) now a little more than 1 year old. Cluster Consultants will be the new building managers taking over from Trafalgar this year. We are looking forward to working alongside them to make this another great building.
A first-class class start to the year with all our units let, we have had our team sort out a few maintenance items, shower doors and cupboard door wheels being the most common. A happy tenant is a paying tenant.

Madison – ( 67 units) Black & White properties have replaced Trafalgar as the building managers. Fully tell and still in very good shape.

Liberty – (120 units) is in good running order, Trafalgar just need to keep an eye on the levies arrears that seem to be a little high.

Time Square – (82 units) is well run with trustees that are keeping looked after.

100 Jorissen – (163 units) seems to be having a bit of a tough time coming right, with overcrowding becoming more noticeable. Overcrowding poses the biggest risk to CBD property. Overcrowding portrays a lack of management and interest that then filters down to the residence of the building, we are to have a chat with management to find out if they are aware of the problems.


2009 will be an interesting year with some investors sitting tight for now and some investors getting ready to start looking at new opportunities again.

We should all take a step back and put a little time into our portfolios; check up on body corporate, see that our banks are giving us the best rate, reduction costs and improving our systems to take the worries out of property.