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Warren Buffett said “I’d rather buy a good share at a fair price then a fair share at a good price.

From this we take the advice that you will be financially better off buying a better quality asset at a fair price than you are buying a lower quality asset because it’s cheap.

We often meet nervous investors wanting to keep their budget low on their first investment property. They’re nervous about spending too much but also want the property to serve them well financially.

The biggest mistake investors can make is buying an underperforming property that does not grow well in capital value. The first purchase is as important as the second or third. If they don’t grow in value, they don’t set you up to leverage from the growth created.

In most instances they have owned their own home for five plus years and have strong equity to draw a deposit from, they have some money in super but not enough and have just been to see their accountant who has advised them to buy an investment property to help towards retirement.

You can currently buy an inner city two bedroom apartment for between $450 and $600,000 depending on variables such as location, size, condition and outlook. As we write this there are currently 251 apartments for sale in South Yarra alone.

The other option is you can increase your budget and spend up to $700,000 and secure a two or three bedroom, two bathroom townhouse in the groovy inner north of Melbourne.

What most investors don’t realise is there is a far better financial outcome buying a townhouse as opposed to an apartment for the following reasons.

  • Stronger capital growth
  • Stronger rental returns
  • Less maintenance/newer building
  • Reduced owners corporation charges
  • Land component included
  • Lower weekly hold cost for the landlord after rent has been paid

The fastest way to create wealth through any vehicle is through capital growth. If you can minimise your out of pocket expenses in the process, you’ll be much better off.

Our Property Investment Analysis (PIA) program is the most comforting tool an investor can have access to. It helps them to make important decisions about establishing a budget, the type of property they should buy and what their weekly financial commitments will be after the sale is completed.

If you’re looking to invest in property call us to discuss how we can help you find the right property in the right area at the right price to help grow your wealth.