How Do I Educate Myself About Property? - September 2020
September 29, 2020 / Written by Rich Harvey
By Guest Blogger, Peter Koulizos, property lecturer and author
Many people are interested in property investment but are unaware how to get started. I’d suggest that the first step is to educate yourself. Property is probably the most expensive asset you will buy in your life. The least you could do is spend some time educating yourself, in particular what type of property to buy and where to buy.
There are some very simple and cheap ways to inform and educate yourself such as:
- Reading blogs
- Reading articles
- Reading books
- Listening to podcasts
- Attend webinars/seminars
- Attending courses
There are many blogs, articles, books, webinars and podcasts and it is often very hard to determine which are the reliable and trustworthy sources. Some of these so called “property experts” write material or produce podcasts as an advertorial, just so that they can lure unsuspecting beginning property investors into their business. These “property spruikers” are a blight on the real estate landscape and should be avoided at all costs. How do you spot a spruiker? There is no fail-safe way to detect a property spruiker but below are four indicators that should help.
- If they are only selling off-the-plan or new apartments as investments, walk away. No, let me correct that – run away! High rise apartments are generally very poor investments and if that is the only product they are offering; you should not be investing any time or money in them by reading their material or listening to them.
- Are they a member of a reputable organisation such as the Property Investment Professionals of Australia (PIPA) or the Real Estate Buyers Agents Association of Australia (REBAA)? There is no guarantee that just because they are a member of one or both of these organisations that they are perfect for you but these two industry associations both have a code of conduct that all their members should abide by and if they don’t, their membership is terminated.
- Do a Google search. What do other people say about them? Don’t just look at the testimonials on their websites but do a deeper search to find out what other people really think about them.
- Word of mouth. I find that the best recommendation is via word of mouth. If someone that I know and trust is recommending that I use a particular business/professional, that is good enough for me.
So, what level of knowledge do you need to understand the local property market to buy your first property? You can’t put it down to just hours of study or years of living in an area but the key is gaining enough confidence through education yourself. Do you feel confident enough to spend a few thousand dollars on a property?
I think that the two key factors to consider when buying property is what to buy and where to buy. Below are three questions to ask yourself to help determine your level of property knowledge.
Qu 1. The best type property to buy for capital growth is:
- An off-the-plan apartment
- A brand new apartment
- An established house
- A character/period style property.
Answer: Ideally d) but c) is a good alternative if you can’t afford to buy a character/period style house.
Qu. 2. Which locations generally offer the best capital growth?
- Suburbs on the fringes of the metropolitan area
- Towns that only have one thing going for them, such as mining
- Suburbs very close to the water
- Suburbs close the CBD
Answer: Ideally d) but c) is a good alternative.
Qu.3. The best reason to buy investment property is:
- Because everyone else is
- To minimise my tax
- To retire richer
- To give up my day job
Answer: Definitely not a) or b). You can give up your day job through investing/renovating/developing property but this takes a lot of time, skill, knowledge and experience. Investing in property is a great way to help you retire richer.
If you did not get all three questions correct, keep studying!
If you don’t have the interest in learning about investing in property or the time to search for property, you might like to use a buyers' agent. Two of the main reasons people don’t use a buyers' agent is because they can’t be certain that they are a good, reliable and trustworthy agent and they don’t want to pay the fee.
In regards as to the fee, most buyers' agents will charge somewhere between $10,000 and $20,000. I know this is a lot of money but this is the sort of the money that you will need to pay in commission to the sales agent if they were selling your $500,000 to $1,000,000 property. What’s more important; paying someone to buy the right property in the right location or paying someone to sell your property? I think they both are important but if you bought a dud of a property, it doesn’t matter how good the selling agent is, you will get a dud of a price.
In conclusion, someone who is skilled and knowledgeable should be buying your property. This can be you if you educate yourself or if you don’t have the time or the inclination, pay someone who is trustworthy and reliable to do it for you.
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