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Maximize Your Real Estate Investments: Key Factors to Consider

We often discuss the difficulty of starting out as a property investor. While there is plenty of learning material available, it’s difficult to figure out which information should be listened to. Conflicting opinions and strategies flood the industry, with everyone offering their ‘expert’ advice.

This also creates a bit of mistrust, as often those offering advice have agendas that can influence the advice on offer. On top of this, there is still a lot to learn before buying that first property. 

For this reason, investing in property can feel like a closed off sector. To start out, it’s a good idea to grasp the basics, so that you can start to make informed decisions down the track and know what information is relevant for you. We’ve provided six key areas to focus your early research. 

These focus areas are standard across the industry, and while they’re may be conflicting opinions on how to go about them, any property investor will claim these to be the major issues to consider early.  

1. Market Research

It’s important to have a good understanding of the current state the property market. Research into the following areas can really help you in the future:

  • House prices: are they rising or falling?
  • Interest rates: are they up or down?
  • Which types of property are performing well?
  • Are there any external factors to consider? For example, what political events are happening across the world which may impact the market?

It’s important to remember that while having a good understanding of the current state of the real estate market is important, it shouldn’t always tell you whether now is or isn’t a good time to buy.

It’s important to understand the concept of  ‘markets within markets’, meaning each market is operating on a different cycle that vary at different times. While properties may be performing in one location, that doesn’t necessarily mean they’ll be performing poorly across the country.

It’s all about knowing where to look and how to analyse the critical factors to make an informed choice, so that you purchase in the right area. That’s why having a good understanding of the market is so important: it helps you stay informed of where is and isn’t doing well. 

2. Knowing short-term and long-term goals

While research around the current real estate market is important, it’s also just as valuable to have an understanding of what you’re hoping to achieve in property investing and your expected return on investment.

Are you looking to achieve returns straight away, or are you looking to commit long-term and build wealth over time? Those looking to make money in the short-term will most likely prefer buy-and-sell strategies, as well as buying fix-and flip- homes. While this is an entirely valid strategy for many investors, it can be risky.

For those with more patience, and looking for long-term gains, investing in properties that can generate rental income is the way to go. Long-term strategies require building wealth through capital growth, where the value of the property continues to grow, leading to higher cash-flow and an asset that is significantly more valuable than upon initial investment. 

3. Location 

The next big part of investment research is deciding where you want to buy property. This is a critical step, as it’s the location which will largely determine whether your property grows in value. This includes the facilities on offer in the location, such as education and medical infrastructure, lifestyle facilities (cafes, cinemas, gyms, etc), and transport upgrades and development.

But it’s not only about what’s on offer in the suburb itself. There’s other things to consider when selecting the right location to buy in, such as the previous market history of that suburb. This means considering vacancy rates, capital growth, yield, as well  as average vendor discounting, stock on markets, building approvals, online search interests, and more!

And remember, you aren’t restricted to what’s on offer within driving distance. You no longer need to physically visit the property before buying, with all this information available online or through a few phone calls.

This means you have access to all the suburbs on offer across the country when choosing the right location. 

4. Type of Property 

One of the undisputed lessons in property investing is that it’s the property which grows in value, not the building. That’s why the type of property purchased is an important factor to consider before investing. The biggest choice is whether you invest in commercial or residential.

As residential is recommended for beginners, it’s then about choosing whether to buy new builds or established properties. Established properties will often involve less upfront costs and have room for growth over time. New property will often come with a hefty price tag, but can be the more attractive option for tenants. 

And of course, there are a range of other considerations. Are you going to buy a property to rent or go with a buy-to-sell approach? Townhouse, apartment, or house? This will of course depend on your resources and goals as a property investor. 

5. Diversifying your property portfolio

As a beginner, you might be thinking that it’s a bit premature to talk about diversifying your property portfolio. But it’s a good idea to start thinking about diversification early. It’s important to not rely on one property as an investor.

There will often be times when that property isn’t performing quite as well as you’d hoped. Having other properties means that when one isn’t performing well, there are others that will be generating income to help alleviate that loss.

Property diversification mitigates the risk involved with property investing, as one property won’t determine your success or failure as an investor. So it’s important to start thinking about that second or third property as a way to protect your investment and generate wealth. 

6. Developing your knowledge

We’ve already touched on how difficult it can be to start out as an investor and figuring out who to trust. While these are some general tips to starting out as an investor that can point you in the right direction, there will come a point where you’ll have to make some decisions and side with one perspective or strategy over the other.

And the best person to trust in these situations will always be yourself. That’s why nothing beats developing your education and knowledge in this area. And if you’re worried about where you’ll find the hours in the day, don’t stress! There are online courses designed to fast-track this learning process and guide you in decisions based on your goals and resources. 

Developing your own knowledge means you won’t always have to rely on the wide range of opinions out there. Becoming your own expert and source of trusted advice is the best way to break into the property investing industry! 


PK Gupta
Published: 28 Mar 2023


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