If you ask most people, whether they should invest their money in a new car or a property, the vast majority would suggest a property is a far more valuable asset.
We all know that a new car loses a fair bit of value the moment you drive it out of the dealership yet most people, will spend many months doing detailed research trying to find the very best car they can get for their money.
As a buyer’s agent, one of the most staggering things I came across is just how little research people do when they buy a property compared to a car.
The extent of most people’s property research is browsing through real estate portals and finding something they like the look of. They then make an offer based on the price the sales agents tells them and that’s it. Invariably, if that property is an investment, it’s normally in the same suburb they live in or an area they’re familiar with.
There’s really no level of detailed research or due diligence and in many ways, these investments are little more than just random speculation at best.
If home-buyers did as much research when buying a property as they do when they purchase a new car, many people would be a lot better off.
When we do our research or due diligence, we have an exhaustive list of criteria that must be met for us to even make an offer. In fact, our research starts many months prior to even finding a property, because we initially have to identify regions that we believe are consistent with our methodology and research, meaning we know they are going to see higher than average capital growth in the next 12-24 months in a strong rental market.
Our detailed due diligence allows us to make smart decisions about various suburbs and also negotiate on price very easily.
In the current market, where it seems all property is rising it’s very easy to get caught up in the hype and forgo the due diligence process. That would be a significant mistake.
The greatest mistake an investor can make is buying the wrong property. It’s not so much that the property will decrease in value, it’s that if it doesn’t grow as much as it could your opportunity cost is just so big.
By doing your research and extensive due diligence on both the location and the property itself, you can be sure you’re at the very least giving yourself the best opportunity to maximise capital growth.
So next time your spending hours looking at new cars, ask yourself whether you should really be researching where to purchase your next investment property instead.