{"id":9790,"date":"2016-11-10T01:00:59","date_gmt":"2016-11-09T14:00:59","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=9790"},"modified":"2016-11-10T01:00:59","modified_gmt":"2016-11-09T14:00:59","slug":"buying-an-investment-vs-buying-a-home-paul-nugent","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/buying-an-investment-vs-buying-a-home-paul-nugent\/","title":{"rendered":"Buying an investment vs buying a home – Paul Nugent"},"content":{"rendered":"

 
\nPaul Nugent<\/strong> explains why buying an investment property and buying your own home are two very different things. He talks to us in response to an email question from Bryce who is struggling with his wife as they have differing views on what to buy.
\n <\/p>\n

Transcript:<\/strong><\/h4>\n

Kevin:<\/b>\u00a0 We\u2019re going to address an e-mail that I\u2019ve received from Bryce at Northgate who writes: \u201cHi Kevin. My wife and I are looking for an investment property, and we have very different views on what will suit us best.\u201d Oh, goodness gracious. I\u2019m going to get involved in a marital dispute here, I can see it.
\n\u201cI think we need to look for a property that has either a great rental return or the likelihood of good capital growth, and I\u2019m perfectly okay to look at the ugly ducklings of the property world. My wife thinks that we should be looking at properties as if we were going to live in them ourselves \u2013 meaning the properties should be modern, finished, in a fancy area \u2013 plus, according to her it should have a nice feel about it.
\n\u201cSo can you please settle the argument once and for all.\u201d I don\u2019t know if I can do that, but I\u2019ll try. \u201cIs buying a rental property any different from buying your home?\u201d Well, the answer, of course, is yes. I\u2019m going to seek some professional advice now from Paul Nugent, who is director of Wakelin Property Advisory.
\nGood day, Paul.
\nPaul:<\/b>\u00a0 Kevin, how are you?
\nKevin:<\/b>\u00a0 Good, mate. Do you want to wade into this marital dispute with me on this?
\nPaul:<\/b>\u00a0 Exactly. Is it a marital question or a property question? Let\u2019s treat it as a property one, okay?
\nKevin:<\/b>\u00a0 I think we should. What\u2019s your answer for Bryce?
\nPaul:<\/b>\u00a0 It\u2019s a very common question that people ask themselves when buying an investment property. In a perfect world, the ideal investment property would always feel like somewhere you might like to live yourself as well as stack up in terms of financial return, because then it would be very easy to spot those sorts of properties and both husband and wife would agree on what to buy.
\nUnfortunately, this isn\u2019t always the case. In fact, it\u2019s very rarely the case. Not every great investment property matches one\u2019s own view on what makes good home, or vice versa. So as much as it pains me to disagree with your wife, Bryce, I think that you\u2019re on the money. You have the right idea. The investor should set aside their own personal tastes and judge investment property purely on investment metrics.
\nKevin:\u00a0 <\/b>Yes. That\u2019s very easy to say. Let\u2019s talk about experience. If Bryce and his wife have really good experience, does that necessarily make them a good property investor?
\nPaul:<\/b>\u00a0 Well, it can help, but it can also hinder, as well, Kevin. The sorts of properties that Bryce and his wife have been trading in over the years, are they investment-grade properties or have they been a series of homes? This is the problem.
\nWhen one is buying a home to live in there\u2019s three major factors that one compromises on \u2013 how much money have I got, where do we want to live, what accommodation do we need? Whereas when you\u2019re looking to buy an investment property, it\u2019s purely a matter of looking for the sort of property that is in high demand and limited supply.
\nNow, that\u2019s quite often a very different property to the sort of property that most people are used to either buying and selling or even living in. So, yes, it is very, very different.
\nKevin:<\/b>\u00a0 Paul, just listening to you now, I\u2019m thinking to myself, \u201cOkay, we have to take the emotion out of this and look at this as a business decision.\u201d Does that mean that I can necessarily buy it purely off the Internet \u2013 I don\u2019t really have to go there?
\nPaul:<\/b>\u00a0 Oh, no. That\u2019s a disastrous way to go. I know a number of people who espouse <\/b>that, particularly over the last 10 or 15 years. Absolutely not. What works for buying any property \u2013 and particularly an investment property where it\u2019s actually about getting the parameters right \u2013 is actually having an intimate knowledge of the market that you\u2019re dealing with.
\nOnly then do you know if you\u2019re buying\u2026 Whether it\u2019s a house or an apartment, it\u2019s not just the suburb you\u2019re buying in or the price range you\u2019re buying in, but it\u2019s the particular street, the side of the street, the position in the block if it\u2019s an apartment. You need to take into account what\u2019s going on next door, what\u2019s going on over the back fence. You need to actually see the property to actually understand it.
\nSo it\u2019s actually a disastrous situation with these people who say that they\u2019re going to buy something just by looking at the facts and figures and looking at some photographs over the Internet.
\nKevin:<\/b>\u00a0 Investment-grade property \u2013 which I think is what you were talking about earlier \u2013 is that just anything in a city or anything near a beach that\u2019s going to be a fairly popular area? Does that necessarily make it investment-grade?
\nPaul:<\/b>\u00a0 Well, it certainly would help if one was close to a metropolitan beach. But I think what really drives investment-grade property over the long term is capital growth, together with a balanced rental yield.
\nNow, the best way to get strong capital growth\u2026 And not looking for artificial growth that\u2019s bestowed on a property by means of rezoning or some potential change in the area. The best way to get inherent strong capital growth is to actually buy a property that\u2019s as close as possible to the CBD of a major capital city that you\u2019re living in.
\nNow, that major capital city, yes, it would be great if it was Brisbane or Sydney or Melbourne or perhaps Adelaide or parts of Perth or Darwin, but it could also be a major regional center. Certainly, with the competitive nature of land use, if one is to buy as close as possible to the CBD without being in it and buying the right style of property, that\u2019s of a consistent form of architecture, in a good residential street, it\u2019ll be very hard to go past that.
\nNow, what drives that over the longer term, Kevin, is actually the level of amenity <\/b>associated with that location \u2013 and by that, I mean proximity for perhaps village-like shops, good public transport, good access to freeways and major roads, good access to park land. This all really helps make an area desirable. Now, if you can overlay that with proximity to a good beach or proximity to a major tertiary institution, even better \u2013 absolutely fantastic.
\nKevin:<\/b>\u00a0 It\u2019s been fantastic talking to you, Paul. You\u2019ve been a great help. Thank you so much.
\nPaul Nugent has been my guest, director at Wakelin Property Advisory. Thanks for your time, Paul.
\nPaul:<\/b>\u00a0 Been an absolute pleasure. Thank you so much, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

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