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Gladstone is located approximately 550km north of Brisbane and 100km south of Rockhampton in the mid-north coast of Queensland, Australia. According to Flynn De Freitas, principal of Omega Investments, Gladstone is fast becoming Australia’s top mining boom town as a result of massive planned and committed infrastructure projects at various stages of commencement. A summary of De Freitas’ article published in the December 2009 Your Investment Property magazine is set out below:

Infrastructure spotting

Investors and developers are infrastructure spotting when they ‘deliberately invest’ in a small town with an impending billion-dollar or larger local infrastructure project. In Australia, these projects are fuelled by the demand for commodities by the booming Chinese and Asian economies and linked to Australia’s status as one of the world’s leading suppliers of natural resources. Mining and energy companies involved in these projects are committed to extract, transport, refine and ship an ever increasing volume of resources within these small towns. As a result, these energy companies are committed to build new mines or gas platforms, railways or pipelines, refineries and ports to fulfil these investment commitments. The common threads among all these large infrastructure projects are:

• Massive cash investments by mining and energy companies into the local economy of the small towns;
• Thousands of new workers will be competing for new mining jobs with $100,000 plus wages being deployed to these projects;
• A shortage of local housing to accommodate this sudden surge in housing demand;
• Experienced investors who have done their research on previous property boom as a result of large infrastructure projects and are looking to invest in impending boom towns before others realise the opportunities and eventual benefits of the projects.

From the chart above, it is obvious that Gladstone’s main natural resource in the future would be concentrated on Liquefied Natural Gas  (LNG). Out of the total of A$66.4 billion dollars worth of infrastructure projects, $51.8 billion or 78% of the projects are LNG related. By far the largest project involves a joint-venture between the third largest integrated energy company in the US, Conocco Phillips with Origin Energy in the A$35 billion Australian Pacific LNG project.

The 3 biggest infrastructure projects are all LNG related which involve some of Australia’s largest energy and resources organisations such as BG Group, Origin Energy and Santos. The A$7.7 billion Gladstone LNG project is a joint-venture between Santos and Malaysian petroleum giant Petronas.

de Freitas believes there are 4 important criteria which identifies booming infrastructure towns in Australia:

1. Population of less than 30,000

Infrastructure towns have to small with a population of less than 30,000. This dynamic ensures the project will fundamentally and permanently change the demographic and economic conditions. Larger towns do not feel the impact of the project on residential housing demand as much as smaller ones. As a result, rental yields and capital growth may be less significant. Gladstone’s population is approximately 30,000 and the migration of new workers as a result of the projects will satisfy this criteria.

2. Project value of A$1 billion or more

Large projects of A$1 billion or more are required to create the impact on local housing yields and value. Gladstone’s planned and committed projects have a total value of more than A$66 billion as shown above.

3. Large peak workforce

The projects’ peak workforce needs to be between 5 – 10% of the town’s normal population to create an impact on rents as the workers move into town. In this case, the peak workforce of the planned and committed projects of Gladstone is 21,400 compared to its population of 30,000, ie a peal workforce on population ratio of 71%.

4. Approved project status

The projects must have achieved ‘approved’ status formally granted by the State and Federal governments. This occurs in the last phase of the ‘feasibility stage’ of the infrastructure spotting cycle. When all the environmental and government approvals are granted, the final endorsement is by the Financial Investment Decision (FID) where the project is then classified as ‘confirmed’. This is the stage where house prices can surge between 10 – 20% as a result of investors jumping onto the bandwagon. Five of Gladstone’s infrastructure projects have received full approvals or entered into the ‘confirmed’ or ‘commenced’ phase while numerous other projects have also submitted their Environmental Impact Statements and are now awaiting government approvals, so they can proceed to FID endorsement.

Gladstone currently has 15 infrastructure projects totalling A$66 billion at various stages of approval and commencement.

Related posts:

• Infrastructure – reaping the rewards of rent and capital growth of major projects

Popularity: 19% [?]

Infrastructure and its effects

Infrastructure is basically major public works and amenities which support the economic activities of a township, community or city. These major works include transport infrastructure such as roads, bridges, railway lines and major highways. Public works and amenities may include power stations, communications facilities, new retail and commercial precincts, business parks, shopping centres, hospitals and large education and learning institutions.

These large infrastructure projects stimulate the demand for real estate as it create jobs, demand for goods and services and provide more effective use and connectivity of economic resources. An increase in economic activity means new and greater disposable incomes which in turn will boost economic growth. More people are attracted to buy and rent real estate in locations which are in close proximity to these major works.

New roads and highways increase the accessibility and transport efficiency whilst a new hospital or university will create more jobs, increase demand for local housing. Shopping centres and business parks have the effect of increasing the retail and commercial mix within an area. If these new investments increase the number of people living in the area, improve travelling times and provide greater employment prospects, then the effects on local real estate values in terms of rent and prices will also be strong.

What type of infrastructure should investors look out for?

Property experts believe that transport upgrades such as new or improved roads and railway links, new shopping malls, hospitals and universities to be key infrastructure and public amenities which are likely to have a strong impact on the residential property market. These type of infrastructure have an effect on the lifestyle of local residents in that it improve travelling times, provide greater conveniences and public amenities and enable better access to and from work. New and improved transport infrastructure which provide better access to the CBD generally broadens the appeal of an area as it saves commuting time for city workers. This is especially so in all major Australian capital cities as land is scarce around these high demand areas. New hospitals, universities and colleges will attract a host of medical professionals and academics such as doctors, nurses, teachers, students as given a choice, these demand groups are likely to prefer living closer to their work place. In general, transport infrastructure such as roads and railway, hospitals and universities are strong drivers of property prices.

Other infrastructure projects such as mines, sea and airports, power wind and desalination plants can create massive job opportunities and demand for local housing. However, some property analyst believe that the effects of resources projects and power infrastructure are not usually as long lasting as the impact of transport projects. The rationale for this is that resources and power infrastructure will create jobs and demand for housing during its construction stage and will slowly dissipate as the projects are completed as it requires less manpower to maintain upon full operation. Mining projects which are unsuccessful have the adverse effect of job losses and this may negatively impact an area.

Questions to ask when deciding on the impact of an infrastructure on the local property market may include the following:

• What is the resident profile which the project expected to attract?
• How many new residents will the project generate?
• How will the project affect or change the demographics of the area?
• Is there a long-lasting impact on the area in terms of permanent employment prospects or whether changes are transient and temporary?
• What is the supply and demand ratio of residential dwellings in the area and how will the project affect this ratio?
• Does the local residential market have strong intrinsic factors such as good rent, affordable and competitive prices and strong capital growth history, notwithstanding the new infrastructure?

Notwithstanding the answers to the questions above, a potential area affected by impending infrastructure works which investors are targeting should, in general, have all the right criteria of a good investment proposition BEFORE considering the new works – strong historic growth in rent and prices, good demographics and public amenities such as shops and schools and close to transport link. Investors should be aware of infrastructure announcements which ultimately do not take place for a host of reasons – lack of planning, political wrangling, poor budgeting etc. Therefore, should the infrastructure project fail to materialise, then the area can sustain and support itself into the future as a result of its existing demand drivers.

Timing of investment

Infrastructure projects usually affect property market in 3 phases:

1. Project announcement

2. Project receives final approval and commencement of works

3. Project completion where perceived benefits are transparent to all investors

The “most appropriate” timing is really a trade of between risk and return and investors’ risk profile. Investors who go in early stand to gain the most but is also bearing the greatest risk. Some projects may commence according to schedule, some may be delayed and some do not happen at all. It depends on how one feels about the risk because buying on first public and usually political announcement is high risk due to the number of instances where projects are announced during an election campaign and quickly forgotten afterwards or bona fide projects being delayed  or scrapped due to poor planning and inadequate budget. Therefore, an initial investment will end up being a dud if the project does not happen but if it takes off, then you’ve set yourself up before all the growth that’s about to materialise.

As a trade-off, the “most appropriate” time might be when the project commences or one can sense that “it’s all happening”. This way, much of the risk is minimised as the growth is certain but has not materialised. In general, capital growth tends to accelerate as the project nears completion and then a further surge upon completion once the benefits of the project are apparent to the community.

Inherent risks

Some project may actually be detrimental to property prices and growth if the development happens too close or too far to residential areas. Location is key and sometimes it is difficult to be fair to all as certain areas may have a more negative or positive impact than others. Protests and local objections have all been observed and well documented such as the desalination plant in Kurnell, Sydney’s second airport at Badgerys Creek. If a major highway is approved and constructed directly in front of a block of apartments with views of the city, this will most certainly affect the prices of those apartments.

If you have to invest in a suburb with a train station, you might as well be as close as possible to the station but not too close to the point of experiencing train or commuter noise. Why invest in an area of a suburb with a train station which is too far to enjoy the benefits of its walking distance? My personal experience is that I have always preferred to buy in a location which is close enough to reap the benefits of a public amenity such as a train station, shopping centre or business park without having to contend with public noise, over-looking issues, commercial and retail traffic commotion and main-road sight. One can directly see the trains and commuters from a distance without having to put up with noise and chatter. Those train commuters who come to work at the business park and shopping centre may also be thinking about how convenient it might be to live in the same location as their work place and hence, lending support, growth and future sustainability to the suburb as a whole.

Key websites about future infrastructure plans in Australia include the following:

National

• Infrastructure Australia

New South Wales

• Transport and Infrastructure Department
• Metropolitan Strategy

Victoria

• Victorian Transport Plan
• Melbourne 2030

Queensland

• The South East Queensland Infrastructure Plan and Program 2009 – 2026
• Department of Infrastructure

Western Australia

• Department of Planning

South Australia

• Plan for Greater Adelaide
• Strategic Infrastructure  Plan
• Department of Infrastructure

Tasmania

• Department of Infrastructure

Australian Capital Territory

• An Infrastructure Plan for the ACT

Northern Territory

• Department of Infrastructure

Related posts:

• Gladstone – the next mining boom town of Queensland

Popularity: 10% [?]

In July 2008, the Rudd government announced a A$623 million initiative to build 50,000 new residential dwellings provide affordable housing to alleviate the severe housing shortage across Australia’s capital cities.

Named the National Rental Affordability Scheme, property investors can now receive up to A$100,000 in annual tax-free incentives over a 10-year investment period from the government in return for providing rental properties at 20 – 25% below open market rentals.

How does it work?

The federal government’s aim is to provide affordable rental accommodation to two broad classes of renters:

1. ‘Critical infrastructure workers’ – this group includes teachers, nurses, fire-fighters and police who have been priced out of the areas which they work;

2. ‘Income and welfare recipients’ – this group are those residents who are being forced to live further and further away from Australia’s capital cities as a result of fast rising rents.

Corporate superannuation funds, property developers and ‘not-for-profit’ organisations were invited to apply and partner with the government to build, fund and own properties which comply to affordability guidelines which resulted in more than 10,000 NRAS-approved properties now well underway in construction.

Investors who purchase NRAS-approved properties are eligible to 10 years of annual ‘tax-free’ incentives commencing at $8,672 in 2010. Each year, the incentive increases according to the rental component of the official rate of inflation. As rental properties increasing at their highest rate in 20 years, the annual NRAS incentive increase for 2010 is estimated to be 8.4%.

NRAS qualifying criteria

NRAS incentives are available only for properties which meet its eligibility criteria as follows:

• New and ‘off-the-plan’ properties only;
• Rented to ‘approved tenants’ at 20 – 25% below market rentals within the same suburb / region;
• Managed by an ‘approved property manager’ who is responsible in selecting eligible tenants, set rental rates and manager the investment property;
• Investment property is rented under the NRAS for 10 years (except in certain circumstances).

As the government intends to issue 50,000 licenses for properties which meet the criteria, individual property investors need to be aware there is a limited number of properties available under NRAS over the next few years.

Purchasing an NRAS property

The process for individual, private investors to purchase an NRAS property involved a little-known concept called ‘non-entity joint venture partner’ whereby the investor enters into a joint venture with an approved NRAS developer or institution (Joint Venture partner) who has been granted an NRAS licence from the government for a particular property. The investor purchases the approved NRAS property and then enters into two agreements:

1. A principle lease agreement with the JV partner who holds the NRAS licence;
2. A property management agreement with an approved property manager who is responsible for selecting tenants, managing the property, set rental rates and ensure compliance with the NRAS requirements.

The federal government pays 75% of the NRAS incentive to the JV partner, who in turns pays this amount to the property manager, who in turns pays it to the investor. The investor directly applies to the state government for the remaining 25% of the incentive.

Investors should also request for a ‘private binding ruling’ issued by the Australian Taxation Office from the JV partner to ensure the purchasing process and requirements are correctly set up to avoid possible non-compliance of any NRAS eligibility criteria.

Among the currently approved NRAS projects include properties located in the following locations:

1. Burnie, Tasmania;
2. Laidley, Calliope, Karalee, Proserpine, Southport, Booval, Redbank Plains, Caboolture and Townsville in Queensland.

Popularity: 38% [?]

As the world takes heed of the impact of global warming, a recent parliamentary report raised the prospect of bans on certain coastal developments exposed to the dangers of rising sea levels.   Some coastal properties in Australia have already experienced corrosion due to advancing sea levels.

Therefore, the implications of global warming for coastal real estate could be significant especially for properties which are less than 5 metres above sea level and are within close proximity to the water. These properties may be subjected to much higher and expensive insurance premiums, insurers imposing risk mitigation and remedial work on owners or face the prospect of self-insurance.

Future new development in areas which are exposed to the risk of rising sea levels may be subject to very strict planning and development guidelines to obtain approval. This increase in restrictions may augur well for the value of existing homes due to an increasing shortage of supply. On the other hand, potential buyers looking for a sea change may actually opt for a tree change instead.

As sea change and coastal real estate become more scarce in Australia, its alternative tree change real estate which is currently in abundance  due to Australia’s vast rural and regional landscape may offer just the lifestyle that is seen to be the less glamorous option, at least for now.

Popularity: 25% [?]


Despite all the written literature about strategies and tactics during an auction, I believe there are no hard and fast rules for winning. It comes down to a host of variables during auction day and some sheer common sense. I was successful at my first auction and more importantly, I bought the right property at the right time, in the right location and at the right price.

This was my experience:

• Research on the location and maximum price the property is worth. I believe this is the most important aspect. Once you have decided the location is strategic, you need to ensure you do not over-bid and consequently, over-capitalise on the investment.
• Research the market. I think it is important to understand and estimate the point at which the property market is at, that is, is it a weak, falling or strong market and what are the auction clearance rates? By doing so, you will be able to gauge the extent of whether it’s a buyer’s or seller’s market and adjust your strategy accordingly.
• Dress to impress? This is one of the strategies “experts” advocate. I was in a T-shirt and my favourite pair of board shorts and loafers and I beat 6 other parties, one of which was a couple who were dressed in very smart business attire. Different attire means different things to different people. To me, even a bankrupt can be dressed in an Armani suit and drive a nice sports car without a dollar and chock full of credit cards maxed out in his wallet.
• Make yourself notice? This is another tactic that “so-called” experts agree you need to do during an auction. I was standing as far back as possible in a large hotel ballroom where there were at least 200 people, half of which were seated in classroom style facing the auctioneer. I could see the proceedings in the entire room whilst fellow bidders were constantly turning back to try and ascertain who I was.
• Don’t bid too early. This is a strategy I believe in. Why bid when the property is not even on the market yet? I started bidding towards the end of the auction and made 8 bids. One can also keep asking the auctioneer if the reserve price has been met. My winning bid was $1,500 higher than my closest competitor.
• Intimidating your competitors with icy stares and gestures? I kept looking ahead and did not bother with what my competitors were doing. I was prepared to walk away with nothing but this calls for a very strict discipline of not going over my budget and what I have done in my research.

Thus far, I have been successful in purchasing investment properties at all auctions for which I have made bids. I have ensured  I have not over-bid on the final price through extensive research and the marginal price difference for which I have managed to be successful.

Popularity: 14% [?]

The following is a general 3-step approach to buying the right property although these steps may be a little different depending on the objectives of an investor and an owner-occupier:

1. Right cycle. The property market moves in cycles and different states have different cycles. One needs to identify the market is close to bottoming out in a particular state / region to get into the market.

2. Right suburb. Identify suburbs with a good track record for capital growth. Suburbs with good amenties such as public transport, schools, business parks and local attractions / lifestyle options but have yet to see any significant rise in prices compared to its neighbouring areas. Suburbs with good upside potential will prove to be good long term investments when gentrification happens. Always choose a strategic location within the suburb such as proximity to ferry wharf, train station, local shops or easy access to main arterial road. These areas within the suburb will always fair bettter than others which are further away from these conveniences.

3. Right property and price. The old adage “worst property in the best street” may only hold true depending on your investment objectives. You may require a bigger budget to renovate and attract tenants if you are an investor.  Once you have found the right property in the right location, the last criteria would be to ensure you pay the right price. Research on the price of similar properties transacted in the past, check out the median price for apartments or house in the suburb (and know the limitations and flaws about median prices). Talking to neighbours or the person mowing the lawn in your chosen suburb is always a good way to find out more useful information.

Popularity: 26% [?]

With rising interest rates, it is obvious that positive cash flow properties will become more scarce. Buying into a positively geared properties has the key advantage, apart from having a positive cash flow, is its ability to shield the investor from the ups and downs of the property market. When the economy or the property market is soft, a cash flow positive investment property does not add additional burden to the investor because it is more than paying for itself.

A combination of the following factors can achieve a positively geared outcome for the investor:

• Low interest rates. It is obviously easier to find positively geared properties in a situation where interest rates are low. However, it doesn’t necessarily mean that these type of properties will disappear altogether.  The astute investor will need to make certain assumptions about where interest rates are trending in order to make informed decisions on whether to fix their interest rate on a mortgage in order to minimise the upward exposure on mortgage costs. Read accurately, a good interest rate strategy can turn properties with negative cash flow to positive cash flow even in rising interest rate regimes because the astute investor has fixed his/her mortgage cost base.

• Potential growth suburbs within capital cities. Every major city has suburbs which have gone through a process of transformation and gentrification. Picking these suburbs involve looking at neighbouring areas which have experienced good capital appreciation whilst property prices in the surrounding (growth) areas have yet to move with the market. As long as these surrounding areas have good public amenities with good access and are located strategically close to the CBD, they are more likely to experience similar growth in the future like their neighbouring areas did in the past.

• No land tax. A modest property which is within the threshold for land tax could potentially save the investor thousands of dollars each year.

• No strata levies. Some investors are more partial to buying landed property over apartment units for this reason. Imagine the amount of savings that can be made over the course of holding an investment property which is free from strata levies.

Among some selected areas identified by experts to  experience good capital growth over the next five years and hence increase the chances of properties being positively geared and give investors an opportunity to refinance are:

• Chippendale and Darlington in Sydney, New South Wales
• Maidstone and Braybrook in Melbourne, Victoria
• Thebarton in Adelaide, South Australia
• Clontarf in Brisbane, Queensland
• Victoria Park in Perth, Western Australia
• Glebe in Hobart, Tasmania

Popularity: 25% [?]

Buying a home can be an emotional experience for some. However, the first thing I tell most people (especially my wife!) when buying a property, regardless of whether as an owner-occupier or an investor, is to leave the emotions out of the process. Lets face the facts, whether you buy to live-in or to invest, it is ultimately an investment which is the single biggest commitment for most people, and if not done properly, it may cost them their livelihoods.

Buying property off the plan means you are buying a property before it has been built. Most large apartment developments are being sold in this manner today. One of the most attractive advantages of buying off the plan is that you are buying a property in the future at today’s prices. In a strong and bullish property market, this may result in large capital gains before you even move in.

I bought 2 properties off-the-plan in April and June 2009 here in Sydney Australia. One is due for completion before Christmas of 2009 and the other is due July 2010. Despite a soft property market here in Sydney until recently, I am happy to note that prices in these 2 developments which I bought into has increased by about 10% – 15% since I went in. I estimate that I have made a paper profit of approximately A$60,000 since exchanging contracts on these 2 properties just a few months ago. Although I do not plan to live in these 2 properties, I believe the following 5 strategies are key when buying off-the-plan:

1. Reputation of developer ~ This is one of the first things to be cautious and look out for. There are many “fly-by-night” developers who will disappear with your hard-earned deposit, never to be seen again! Do your research and go with those who have a track record of building quality developments. Some of Australia’s best developers are listed on the Australian Stock Exchange and this is credibility plus! Of course, they may also be charging a premium based on their reputation so you need to do your homework and make sure you are not overpaying. Check out their previous developments, finishings used and their locations. You can usually read about them and find out if previous customers are happy with their purchases.

2. Research your chosen suburb or location ~ Ask yourself why you would want to live in this location or what you prospective tenant will see as an attraction. Some typical attractions will include convenience to shopping and public transport and amenities, school and hospitals and local attractions such as beaches and parks. Always compare the price of similar apartments with quality finishes and understand what is the average suburb price to ensure you are not paying a premium or over-capitalising on your investment.

3. Research on the development and your particular apartment ~ Ask yourself what are the most attractive features of your chosen apartment and why would your prospective tenant want to rent your unit? Some typical attractions will include quality finishings and appliances, good layout and style, water views or great aspects for entertaining, access to facilities such as pool, sauna, gym, security, visitors’ parking and conveniences. However, you need to be cautious that these facilities come with added charges such as your strata levies and administrative expenses. These are usually estimates during the purchasing stage and may also vary depending on the final outcome of the development.
4. Negotiate and bargain ~ The old adage “if you don’t ask, you don’t get” is all but very true here. The developer is usually keen to increase sales in order to secure bridging finance from their bankers to fund the development. Once you have decided to take the plunge, get in early so that you have a greater choice of apartments with good floor plans, views, interior style and the like. Thereafter, don’t be shy to negotiate and bargain for “extras” such as appliances, finishings and delayed settlement. As an example, I managed to negotiate only a A$10,000 deposit for one of my properties with delayed settlement, additional air-conditioning etc. With another, I managed to get an extra car space at a substantially reduced price which enhances the property should I decide to sell in future. This is in addition to huge savings in stamp duty and taxes. Some developments also come with rental guarantees and one of my investments have benefited from this for the last 2 years where you save the trouble from looking for a tenant. Be sure this condition is not compensated by a premium on the selling price though.
5. Get a good lawyer / conveyancer ~ Here, I mean a “good lawyer” and not “a friend who happens to be a lawyer”. A good lawyer who is experienced in similar contracts will help you to go through the “fine print” to ensure you are protected and have recourse in the event of default by the developer. A good lawyer will also be able to assist in the negotiation process, explain the implication of by-laws and regulations and how that may affect your investment and occupation of the apartment.

Popularity: 18% [?]

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% [?]

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% [?]