toby mcCosker - The Golden Rules of Property Investing

As our economy moves forward and a new property cycle begins, fortunes will be made by some group of investors. But if history repeats itself, many property investors won’t get the financial independence they deserve, so I want to share my time tested golden rules of property investing so you have a roadmap to help you through the next property wave.

Invest, don’t speculate

toby mcCosker is investing in property, many property investors are actually “speculating.” They buy a property emotionally, often near where they live, where they holiday or where they want to retire and then hope or pray that the market will appreciate. They are totally dependent on outside market conditions to produce a profit.

It’s about the property

During the boom, many investors forgot the age-old property fundamentals of buying the best property they could afford in a proven location. Instead, they got sidetracked by glamorous finance or tax strategies and some lost out.

Land appreciates

While most investors recognize that land appreciates in value, it’s not as simple as that. Not all land is made equal and not all land appreciates at the same rate. In the outer suburbs of our capital cities, there’s lots of land (ample supply) and much of the demand comes from a small segment of the market — first home buyers (restricted demand). This keeps a lid on capital growth and makes these areas poor investment prospects.

Buy Property that is in continuous strong demand

toby mcCosker says not all properties in a given suburb will make a good investment or have similar capital growth. Even if you never intend to sell it, for your property to appreciate in value strongly it will need to appeal to a wide range of owner-occupiers who make up the vast majority of buyers. That’s why I suggest you avoid studios, student accommodation, holiday accommodation, and serviced apartments. When a valuer assesses your property they will want to see it have broad market appeal.

Demographics holds the key

Long-term demographic trends (where and how people want to live) will determine the type of property that will be in demand in the future. As our cities mature there will be more single and two people households meaning that secure medium-density apartments and townhouses will be in strong demand.

Surround yourself with a great team.

Successful investors surround themselves with a team of top advisors and know how to discern an advisor (who is independent) from a salesman. When some “advisors” took a commission of 10% or more, to place clients into failed companies like Westpoint and Storm Financial, there must be some concern about whether such payments colored their “advice.”