Where to dig for gold
The Reno Kings talk about ‘gold in your backyard’, referring specifically to extracting more out of what you already own rather than buying a new investment property. And whilst it may seem strange that a buyer's agent is telling you to look at what you have before buying new, it can help you build your portfolio and buy better down the track. A win-win for all. So let’s put on our pirate hats and start digging for gold!
Gold in them backyards, arrrggh!
Most property investors are looking to expand their property portfolio and in almost every instance it is usually through making another purchase. This is brilliant, but don’t forget you can often expand without the need to buy, or you don’t have to go as far as you think to find the gold. Here’s a few quick tips for you.
Review your portfolio
If you already own property, make it a periodic task, say every 12 months, to review it. Review rents, review maintenance, review upgrades and review development potential. We do this for three reasons. The first is we may have purchased the property for one purpose (say as a rental) and never considered it in any other light (say as a development site). The second is because our circumstances change. Maybe in the back of our mind we know it can be developed, or easily renovated, or converted to student accommodation, but at the time of purchase some of these options may not have suited, but it might now. The third reason is because everything else can change. The town planning rules may differ now, or the numbers now work where as they didn’t previously, or the rent that can be achieved is much higher than what you are currently achieving (even after taking into account the token $10 increase your property manager seems to suggest every 12 months).
It is far too easy to become complacent with our properties over time. Property investing should be treated like a business, with regular reviews and maximum return obtained at all times.
Your next property investment could be one you already own.
Look to your neighbour
As the Reno Kings say, sometimes 1 + 1 = 3. Sometimes it makes more sense to look at buying your neighbour than a property elsewhere. It may be possible to purchase directly and at a discount, and combining may provide you with greater development opportunities that existed on your own. It may not offer any benefit at all, but you need to at least explore this.
Tip: When you first buy a property introduce yourself to your neighbours and let them know you love the area, love their property, and ask them to speak with you before selling. It may even open the door for a JV.
What if I don't find an opportunity in my own backyard?
That's ok, you are no worse off for at least looking and now you know your best option is to buy a new property. Just be sure to continue to review your portfolio and look to your neighbours in case things change.
Investigate Property may not be able to help you with your 'own backyard', but we can certainly help you source your next investment property. For more information on how we can help follow this link.