In a changing market you have to be willing to change your strategy based on the current conditions. No matter what the stage the current market is at, it’s important to always focus on the value add. By focusing on properties in which value can be added you can directly influence the growth of those properties. This gives you more control over your investments.
One great strategy at the moment is buying land, provided it is not part of an estate. As with any property investment, prices increase with lower supply and higher demand. When purchasing in an estate you must be mindful of the amount of product being released over a short time period. By purchasing land in existing areas, either rear blocks or newly subdivided blocks, you can directly add value by building a new dwelling on the land. This strategy works particularly well for those with serviceability (can get a loan) but have less cash or equity on hand.
Some of the benefits of this strategy are you only have to pay a deposit on the land itself, which is significantly cheaper than paying a deposit on a fully completed house. Stamp Duty is only paid on the land component, as well as the fact that you can get a loan against the future value of the property (once built). The key to the success of this strategy is purchasing land at a discounted rate and creating an end product that has instant equity, as the cost to purchase and construct is under market value. Another benefit of constructing a brand new property is you are able to claim depreciation and it is generally easier to rent and/or sell.
Due to our relationships with vendors around Perth we regularly have access to reduced land in areas within 25km of the city centre. If you would like to explore this as a strategy for your portfolio you can find out more information here or fill out a contact form and we will get back to you as soon as possible.
Alternatively if you would like to know more about property investing and subdivisions check out our upcoming events. We regularly hold property investment seminars and educational bus tours.