When it comes to property investing in Sydney, where does a savvy property investor (or even those that aren’t so savvy) begin? Sydney is a beautiful harbourside city that undoubtedly has a lot to offer; water views, cultural diversity, a thriving foodie scene, accessible public transport, and plenty of amenities.
Property is typically deemed as a “safer” investment option. And, when you’re dabbling in property investing in Sydney, you’re almost guaranteed to see long-term capital growth. That said, it’s critical that you buy the right kinds of properties in the right areas.
There are no hard and fast secrets when it comes to property investing in Sydney, yet it pays to do your research and make measured decisions. Even if you understand the basics of property investing, the more you can learn, the better! So, here are our top tips for finding the perfect Sydney property.
1. Understand How to Make Money when Property Investing
Our number one tip is to understand what it takes to actually turn a profit when property investing in Sydney. In most areas in Sydney, profits will come from long-term capital gains.
So, if you’re looking to see a strong return in six months, property investing in Sydney might not be the right move for you. Of course, you can get lucky by investing in an up-and-coming suburb or “flipping” a property, but to adopt these approaches you’ll have to do your research.
If you’re considering buying an investment property it’s also important to understand all the tax benefits and pitfalls associated with being a property investor. That way, you won’t have any nasty surprises at tax time!
2. Know Your Investment Strategy
Before you even start looking for properties, decide on your investment strategy. There are several property investment strategies you can choose from, but the key ones are:
- Buy, renovate, and sell, where you would buy and hope to sell in future to achieve maximum capital gain. This is typically a short-term strategy in which you would need to monitor any costs closely to ensure they are offset by potential gains
- Buy and hold, in which you would buy a property and hold it in the hopes of selling it for a significant gain. Ideally, any rent you receive in the meantime will cover your mortgage repayments
- Buy, renovate, and rent, where you would buy a property with potential and spend a little money renovating it in the hopes of maximising your rental income
There are other strategies to explore, too, so it’s important to choose one that suits you best. Your chosen strategy will depend on a variety of factors, such as your financial situation and knowledge of property investing.
3. Find a High-Quality Investment Property
No matter which investment strategy you decide on, make sure you buy quality properties that you can actually afford. High-quality properties in trending areas can always be resold if they need to be. Remember, this is an investment, so chances are you won’t be living in it. It doesn’t need to have everything you would want in your ideal home.
Instead, try to find properties that:
- Are located in a high-demand area
- Have a logical layout
- Are close to amenities
- Are not in an area known for natural disasters. For instance, you probably don’t want a property located in a flood zone, as you’ll have to pay hefty insurance premiums
Make sure you conduct a thorough suburb analysis before you buy, and continue to read widely about any upcoming developments in the area.
4. Consider Using a Mortgage Broker
If you’re new to property investing in Sydney, you should seriously consider using a mortgage broker. If this is your first property, they’ll be able to guide you through the entire process. On the other hand, if you’re using the equity from another property (or properties), your broker will be able to determine how much you’ll be able to borrow and how quickly you can secure a loan.
5. Get to Know the Intricacies of the Sydney Property Market
Sydney is spread out across a vast area and contains over 650 suburbs in total! Consequently, not all suburbs should be treated equally. There are countless sub-markets within the Sydney market, each with its own nuances.
Ideally, you want to invest in those suburbs that have the potential to grow in value in the future. For instance, Alexandria grew over 30% in the past year. Investing in suburbs like this might work in the short term, but not necessarily.
As the suburb has already grown dramatically, it may be a better idea to invest in surrounding suburbs that have the potential to grow even more! Of course, not all of us are fortune tellers. We can never know for sure what the future will hold – case in point: the pandemic! But keeping informed means that we’ll make smarter investment decisions.
It’s absolutely crucial that you keep updated on which Sydney suburbs have strong potential to grow, which suburbs have already hit their peak, and which suburbs may be declining in popularity.