Most investors would agree that buying a high-quality investment property requires comprehensive research. So why do so many fail to achieve the returns they hoped for?
While it’s true that some investors conduct inadequate research before they buy, the real problem for investors is that most research is not designed with the investor’s goals and interests in mind. This can lead investors to make significant investment decisions based on information which is, at best, incomplete or, at worst, misleading.
During your research, it’s wise to consider who the research was originally developed for.
For example:
- Property developers commission research to find sites that will be the most profitable and provide the best economies of scale, to allow them to develop and profit again and again.
- Property industry bodies collect data and report on city-wide and nation-wide statistics and trends. This information is interesting reading (hence why it’s so eagerly published by news media outlets) but it doesn’t give much insight into how local areas perform for investors – and more importantly, why they perform (or fail) the way they do.
- Property marketers conduct research on local economic and property market activity in order to find the best ‘good news stories’ to use to market and sell their client’s development project.
So how can investors be sure that their research will lead them to find and acquire a high-quality investment property? Here’s some tips from our team on what makes property research work:
- Collect a large volume of data, from a wide variety of sources. This could include your typical real estate data, government-collected data (e.g. Census), industry reports and economic indicators.
- Consider the macro factors (i.e. city-wide factors) of economics and population trends, as well as the micro factors (i.e. street-level factors), such as local area gentrification and the emergence of new caf?© strips. Public and private spending on infrastructure should also be analysed.
- Some of the most valuable data is not published broadly. That’s why our research team consistently record suburb-level supply statistics, track upcoming property developments and read local council minutes. These behind-the-scenes details can make or break a property’s performance.
In addition to conducting comprehensive research, investors also need to understand the drivers of property markets. If you don’t have a complete understanding of what makes property prices rise, you’ll never be able to find a high-quality investment property.
Most investors don’t have the time or inclination to conduct this level of research, so it makes sense to appoint a property investment advisor who has access to the relevant research, understands market drivers and knows how to apply this to your property investment strategy.
How does Momentum Wealth compare?
At Momentum Wealth, we are regularly monitoring property market data to drive our recommendations and advice to clients. We don’t sell property – we work exclusively for buyers to find and negotiate the acquisition of the best properties (residential or commercial) that meet their criteria and investment strategy.
Our in-house team monitors and completes detailed analyses of the property markets (in Perth and Australia wide) to identify future growth areas for our clients to invest in.
If you would like more information on our services, simply contact us here.