What kind of property buyer are you?

The Homely Team
3 min read

There is always property for sale. However, knowing which property to keep an eye out for is essential. A lot of people make the mistake of looking at too many different types of property, without having a clear approach as to how they want to use their investment. This can be detrimental long term, as you can be looking in growth suburbs one Saturday, and then inner city apartments with an immediate return the next. Today we present the different approaches you can take to property investment, and why they may or may not work for you.

1. A Flipper! 

This property investment will suit a buyer who is active. A flipper needs to know the details about the property from the outset, and know that come settlement day, they are going to implement a plan of action to get things done. One of the main skills you need to have if you are a flipper is you need to be exceptional at time management. You don’t buy these kind of properties without a clear plan in mind. You also need to know what you expect you can get out of the property STCA. Can you get a duplex built on to the land? Does it have the required land size? All of these questions need to be answered with a view to holding on the property for the shortest time possible.

2. A Home- Stayer

The most common form of property buyer is an owner/occupier. Here, most people buy their ‘dream home’ and move in to it. They generally spend money on doing the property up and trying to add value to it. When you do come to sell this property you will be able to sell this capital gains tax-free which is a bonus. It’s important to note a lot of people over-capitalise in this market and don’t look at alternative investment platforms. Whilst it may be where you live, ensure when you buy this, you do ask if this will still be a good place to invest for long term return.

3. A diversifier

Another approach to property buying is the ‘not have all your eggs in one basket’ approach. Here instead of capitalising as a ‘Home-Stayer’ on one main property, buyers look at buying two or three different properties and using them as investment options. This will mean that your primary residence won’t be as nice as you originally had hoped for. (The $250,000 less could mean a deposit and a little more on two further properties) but you will be able to invest in multiple areas and diversify your risk. It also allows you to prospect more so on future growth areas and take a punt. This can be more appealing to people who want to roll the dice a boom in a new area.

4. A data calculator

Some people buy property based on pure mathematics. Data is very powerful, and when you look at stats from RP Data and the ABS, that inform you where employment will increase and where more resources will be allocated, people look at buying homes purely as a supply and demand equation. They equate the fact that if more resources are allocated to an area, they are more likely to get used, and if they are getting used, people will also want to be close to them. By being close to these pieces of infrastructure, and increased employment offerings, you can be assured that people will want to live nearby as they will want to be close to work and their daily surroundings. Suburbs such as Sunshine have been touted as suburbs like this.

5. A romantic

Unfortunately, this can be the most dangerous kind of buyer in the market. The reason being is that you purely by with emotion and not with economics. It can also mean that when it comes to resale, you can have a really hard time selling it for what you paid. Try and remember that it is just bricks and mortar, and everything is changeable. Don’t fall too in love with a house or you could pay well over for it.

No matter what kind of buyer you are, you need to always do your research and have a plan. The biggest mistake people make is buying something ‘Romantically’ and then trying to turn it in to a flipper, or justify it as a data- driven purchase. In these scenarios it just won’t stack up. You need to do your research and have a goal in mind in order to achieve your property success.

The Homely Team
The Homely Team bring you the latest in Aus property ranging from tips on buying, selling, renting, investing, building, moving house, suburb information and agent advice, all from industry experts.

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