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In buying properties, particularly apartments, I believe the decision making process will be balanced and sound if 5 important principles are covered:

1. Location

I hate the cliché “Location, location, location”. Sure, it is to emphasise the importance of location for a particular property. However, location means different things to different people and it depends on whether someone is buying the property as an investment or as an owner-occupier. Some prefer the hustle-bustle of city living and can put up with increased human traffic and noise, yet others may prefer a more leafy surrounding whilst sacrificing distance to the CBD. In general terms, I believe a strategic location should cover the following aspects as far as possible:

a) Close proximity to public transport and CBD ~ public transport adds appeal as it gives the owner or tenant an alternative to private transport.

b) Close proximity to good schools / learning institutions. For most students and families, this is a big attraction due to convenience and prestige.

c) Local attractions such as shopping malls, parks, cafes & restaurants, beaches and other significant local amenities add to the lifestyle and allure of the location.

d) Minimal traffic noise ~ it is generally better to avoid being located on major streets and highways, toll-roads, train lines and flight paths to minimise traffic noise but close enough for easy access by car and public transport. Remember, real estate agents like to use words like “whisper quiet street”, “cul-de-sac” to promote a location which is peaceful and quiet and this is a legitimate appeal to most buyers.

e) General surrounds ~  a leafy, tree-lined street and lower population density location is generally better than one which is over-crowded with apartment blocks, commercial and industrial facilities although in some cases, the latter may also have good investment outcomes in the long term.

Obviously the above may be less applicable for investments such as a holiday lodge by the ski fields, an ocean-front property or other higher end properties and apartments.

2. Floor plan

The most important aspects of floor plan should include the following:

a) Floor plan design should promote privacy for bedrooms, efficient use of floor space and modern open plan living for family living and entertaining.

b) Courtyards, patios and balconies should be of good size and configuration for outdoor living and entertaining.

c) Good storage facilities such as wardrobes, bathroom vanities, kitchen cabinets, laundry and utilities.

d) Aspect, views and outlook ~ In Australia and the southern hemisphere, one of the most favoured aspect of a property is the north and north-east aspect as it provides ample natural light. This is important as it gives the apartment its distinctive “feel”. Bright and sunny aspects, district, water and uninterrupted views are preferred. Be sure that existing views will not be built over and blocked by future development as this is a sure factor which will decrease the value of your investment.

e) One important factor which buyers often overlook is ceiling height. The minimum ceiling height required for apartments in New South Wales is 2.45m. An apartment with good ceiling height should be approximately 2.7m although ceiling heights may vary from different living areas such as balconies, kitchen and bathrooms. High ceiling and lofts give a sense of space and openness.

Note: In New South Wales, a bedroom must have at least a window to be deemed as such.

3. Finishes and inclusions

These items refer to the quality of kitchen appliances, gas cooking and heating facilities, quality shelving and cabinets, tapware and bathroom fittings, quality carpets, paintwork, door panels, handles and skirtings, glass doors, powder-coated panelling, switches, modern lighting, reverse-cycle air-conditioning, bathroom and kitchen wall and floor tiles, wall panelling.

4. Body corporate / maintenance

The effectiveness of the Body corporate of an apartment development will determine the strata levies, both the sinking fund and the administration levy that you will be liable to pay. Personal preference will dictate whether you will be willing to pay for conveniences such as swimming pool, gymnasium, spa and sauna, concierge, on-site security guards and other facilities. Building with poor management and maintenance will deteriorate more rapidly, thus limiting your investment up-side.

It is also good to know the ratio of owner-occupiers and investors in a particular apartment block. Owners tend take better care of their properties and a high level of owner-occupiers is generally better than a building which is majority occupied by tenants.

The profile of occupants is also an important factor, ie whether they are professionals, retirees, students or migrants will have an impact on the marketability and appeal of your apartment.

5. Research

This is one of the most important piece of homework that you need to do. Before you dive into the buying process, do look at as many houses and/or apartments in as many locations as possible. Talk to friends, experts and people who live in the neighbourhood that you are considering and gather as much information as possible. This way, you are able to compare and contrast between the good, bad, acceptable, tolerable to the down-right unacceptable. A good comparative measure is price and price per square metre, which is obviously determined by location and quality.

Popularity: 14% [?]

This is a really useful tax guide for rental properties from the Australian Taxation Office.

Popularity: 9% [?]

I believe the following suburbs have good prospects for strong capital growth in the long term.

No.	Suburb	Price range $	*Average suburb price $ & 5-year growth	Type of property	Reason
1.	West Pymble, Sydney	$600k – $800k	$816k, 15%	Vacant land or house due for renovation	Relatively inexpensive compared to the east side of Pymble. Areas to consider would be on the east side of Ryde road in Minnamura Avenue and Kiparra street. This area is leafy and secluded but yet have easy access to Ryde road and Pacific Highway.
2.	North Ryde, Sydney	$650k – $800k	$675k, 7%	House	New train station and commercial development and new offices on Delhi street. Areas to consider would be houses on the west side of Pittwater and Epping roads close to this new train station.
3.	Melton South, Melbourne	$180k – $220k	$200k, 29%	House	Strong net migration to Melbourne and low base for good capital growth. outer west Melbourne is still relatively undeveloped but is experiencing strong annual migration growth. Properties to consider would be houses with approximately 500sqm  -  800sqm on streets which are close and to the north of Melton South train station.
4.	Macleod, Melbourne Watsonia, Melbourne	$390k – $480k $330k – $390k	$442k, 51% $384k, 38%	House House	Strong net migration to Melbourne and these two are suburbs which are just within the 20km radius to the CBD but are still relatively inexpensive compared to those closer to the city. Good residential suburbs with easy access to the CBD, close to La Trobe and RMIT Universities. Properties to consider would be houses with approximately 500sqm  -  800sqm on streets which are close to the Macleod and Watsonia trains and trams.

*Source: Your Investment Property, July 2009

Popularity: 8% [?]

One of many simple ways to justify charging higher rent is to identify small improvements which will make a big difference to your tenant’s comfort. Recently, I decided to upgrade the tapware, toilets, cooktop, rangehood and dishwasher in my lower North shore apartment which were the originals from 25 years ago.

The tapware consists of the older dual hot-cold system and were dated and leaky. The toilets had plastic cisterns which were not functioning properly while the kitchen equipment were less than effective having endured its fair share of battering through the years. The apartment was tenanted within a day of advertising and the new tenants were more than happy to pay a small premium for the brand new upgrades.

These simple upgrades which were due anyway significantly improved the comfort of my tenants and now all parties are happy.

Popularity: 3% [?]

One of my favourite properties in my portfolio is a 1 bedroom courtyard unit in Rhodes. It has a total area of 85sqm which includes a good size, north facing courtyard of 20sqm. The compelling strengths of this property are as follows:

Guiding Principle	Compelling strengths: 1 bedroom apartment at Sienna by the bay, 2 – 8 Marquet street, Rhodes
New or near new	Building completed in February 2008.
Tenant’s amenities	The apartment is set within a security compound with a large 20sqm, north-facing courtyard which extends onto the immaculately maintained garden and common grounds, giving an added sense of space and serenity.
Access to public transport	150m to Rhodes train station, buses to CBD.
Local attraction and lifestyle	Walking distance to Rhodes shopping centre, Rhodes business park, walking and cycling track along the water foreshore to Bicentennial Park, Homebush Bay and Olympic centre. Within walking distance to the Rhodes business park which now includes large organisations like Unysis, Australand, Hewlett Packard, Lion Nathan, Alcatel-Lucent, Nestle.
Attractive floor plan	Fairly large with a total of 85sqm of living space. The toilet is a separate powder room with its own basin. This is the only 1 bedroom unit in the Sienna development of over 300 units with this distinguishing feature where the toilet is separate from the bathroom.

This unit has been tenanted since day 1 and is currently rented for $450 per week.

Rental rates have increased for Rhodes apartments over the last couple of years. 1 and 2 bedroom units are asking around $400 – $475 per week and $520 – $600 per week respectively. This could be fuelled by having the convenience of the Rhodes shopping centre and train station within such close proximity.

Over the past 18 months, new developments have come on-stream and these include the following:

1. Tandara development – 1, 2 and 3 bedders by Mirvac.

2. VQ development – 256 units of 1,2 and 3 bedders developed by BilBerger with an average price of approximately $580k.

3. Peninsula development – 1, 2 and 3 bedders by Meriton

For investors who are keen to consider apartments in Rhodes, I have conducted some research on this suburb for your benefit. Please feel free to give me your feedback and comments!

Popularity: 13% [?]

I first read about Ian Hosking Richards in the April 2009 issue of Your Investment Property magazine. I was impressed by the way he managed to eventually quit his day job earning $35,000 a year in a warehouse. Through his methodology of acquiring investment properties, he has accumulated a portfolio worth over $13 million from scratch. From someone who used to work in a warehouse in his previous job, today Ian is the Chief Executive Officer of Rocket Property Group, an organisation which helps property investors to realise their life goals through intelligent property investing.

In buying my own properties recently, I have used some of his advice and investment principles in minimising risk and mistakes:

1. Buy new or near new ~ The array or modern conveniences in new apartment dwellings such as reverse cycle air-conditioning, lighting systems, gas kitchen, modern appliances, lifts, storage , video security and finishings all have a distinctive advantage over older style apartments both for the owner occupant or tenant. Current incentives given by the Australian government also encourages purchase of new dwellings by both local and foreign investors. In addition to these new and modern facilities, investors are entitled to significantly higher amounts of capital allowance and depreciation against tax payable.

2. Build relationships ~ I have developed new relationships with agents, bankers, property managers, conveyancers and solicitors all of whom I believe will assist me in the future.

3. Use interest-only loans ~ Since the interest portion is deductible against income, this greatly reduces monthly repayments.

4. Educate myself ~ I try to be open-minded at all times, listen to what all parties have to say, and evaluate their views to ascertain if it works for my particular situation. I try to keep a log of issues, problems, solutions and will share these with you in due course.

5. Have a plan ~ I try to think ahead, draw up a financial plan on how to manage, fund and maintain my property portfolio.

Popularity: 32% [?]

The choice of location is by far one of the most important considerations in property investment. Properties which are close to public amenities such as transport, hospitals, shops, local attractions such as beaches, ocean fronts, parks, cafe and restaurants will usually attract both owner-occupiers and renters alike.

However, your needs and preferences as an owner-occupier may differ vastly from the needs of a tenant. One way to determine the location of your property is to ask yourself whether you are buying the property as your principal place of residence (PPOR) or as an investment. Putting yourself in the prospective tenant’s mindset will also provide good insight as to the type of property and its location.

Popularity: 10% [?]

Owning a home or to use one of the most common cliché “to have a roof over one’s head” goes back to the notion of fulfilling the most basic of one’s need and livelihood. To most families, working towards eventual home ownership provides a sense of purpose, belonging, physical security and well-being. To others, getting into the property market is the very first step towards wealth creation in the long term. I am a strong believer that once you have asked yourself this question, you are creating the motion for self-growth and building a secure future for yourself and your family.

On the other hand, there are also individuals and families who may be long time renters, either by choice or otherwise. Given the complexity of today’s financial and equity markets, it is important to appreciate there are a multitude of investment and wealth creation options available to the investor and property investment is merely one of many.

There are also investors who may alternate between owning and renting over a period of time in an attempt to maximise their wealth and return on investment. The choice between paying mortgage and paying rent may be dictated by a number of factors such as property market trends, interest rates, personal circumstances and preferences, risk aversion and government policy.

By far the majority of people who get into the property market buy their first home which they intend to live in. Rather than living with family or paying rent, they see that paying down a mortgage to own a home will provide the long term financial and physical security.

Beyond this first home ownership, investors who buy a second property do it for a variety of reasons. Some investors take a long term view of property and see capital growth as being wealth creation and a good return on their investment. Yet some others may be in steady and high paying jobs and use negative gearing as an avenue to minimise their tax liability. There are business people who buy commercial or retail property to assist in growing their businesses where expenses incurred from owing the property are tax deductible against their business income.

Therefore, the would-be property investor needs to be clear of his or her financial and investment goals and the reason for getting into the property market.

Popularity: 8% [?]

First and foremost, investing in real estate is a long-term venture. When contemplating to invest in property, you must be certain you are able to afford holding the property over the long term (a minimum of five years) due to the general nature of real estate being an appreciating asset. In general, capital growth in property only comes with time and you must have the cash flow to support and maintain the expenses of your investment property.

Buying your own home is usually the first big investment many people make in their lifetime. However, your first investment in property need not be your home. Many young people are now choosing to make small investments in property while staying with parents. It is the hope that these small investments will eventually fund the purchase of their dream home.

The most basic step in considering your first property is to ascertain your budget, that is, how much do I have to put down as a deposit (usually 10% of the purchase price of the property if you are successful in securing a home loan) and the associated costs such as stamp duty, legal fees and initial outgoings. I would allow for an additional 5 -10% of the purchase price, depending on the type of property for these additional acquisition costs.

Saving up spare cash and getting financial help from parents are among the most common ways towards a deposit although first home buyers are now using new ways to find that first deposit such as sharing with siblings and friends.

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Congratulations!!  You should be very proud of yourself because you have crossed the first and perhaps most difficult hurdle towards owning your first property. I always tell myself – “Be thankful you have a deposit, a lot of people are struggling with daily expenses let alone save for a deposit and they will most certainly be renters for a long while”.

The next important step towards owning your first property is to obtain finance or an approval for a home loan to complete the purchase. (This will be discussed in detailed in the Obtaining Finance section).

Popularity: 1% [?]