Is your New Purchase "Investment Grade"?  How can you know?

What does it really mean to own an “investment grade” property?

Generally speaking, holding an investment grade property with high growth potential in future years means purchasing a property that will leave you out of pocket each week, in the first few years at least.  This is because high growth properties tend to have low rental yields.  These are the ones that perform better over the long-term.

But what drives capital growth, to assure a buyer of future benefits for their short-term shortfall?

The main driver of capital growth is demand.

This means that when it comes to buying real estate, purchasers should consider buying properties in locations where people want to live and have always wanted to live, where rental yields are not very high, where there is strong local economic growth, jobs and wages growth.  Consider purchasing in areas where there are employment opportunities, strong transport networks, close to beaches, close to the CBD, with shops and entertainment near by.

Consider what appeals to owner-occupiers, because it is owner-occupiers that drive price growth / capital growth.  Also consider homes where you can manufacture capital growth, ie, buy something that you can renovate to increase your capital growth.

Melissa Maimann is a Licensed Real Estate Agent and Buyer's Agent in Sydney. She assists home owners and investors alike with a responsive, accurate and affordable service that empowers property buyers to make informed purchase decisions. Melissa's service is diligent, efficient and accurate. If you need expert knowledge and advice for your next purchase, don't hesitate to make contact.