You wouldn’t buy a car without doing a little research.
A Google search, customer and expert reviews, model comparisons and of course, a test drive.
You want this car to last for years and be a reliable performer so you’re not going to rush into anything.
So how about something worth not just thousands, but hundreds of thousands of dollars?
How much more research should you invest into such an outlay?
I have long held up a “buyer beware!” sign for investors in certain pockets of Sydney.
Sydney’s Western suburbs have been popular with many other so-called experts in the media, but it has distinctive issues that investors may not be aware of.
The Asbestos Belt
For instance, would you be able to recognise a home riddled with asbestos?
Would you know if a property contained toxic lead paint?
Would you know which areas are becoming undesirable to tenants, and which ones may require mandatory renovations in the coming years?
Sydney is unfortunately home to what I call the “asbestos belt”.
There exists a real possibility that tenants will take civil action against landlords in the next three to five years, much the same as is happening in the US currently, over this because it could become a truly serious health issue.
For property owners, this means that the value of the property could decrease to virtually land value only, and further costs may be incurred to demolish the old home made of fibrous sheeting.
Landlords could be caught up in a legal suit due to health issues and these events will obviously have a huge impact on your bottom line.
You may think I’m painting a picture of the worst case scenario but even if it doesn’t unfold in quite that much of a drastic fashion, I believe the “asbestos belt” will undergo a major, possibly mandatory transformation within the next five to 10 years.
I think critical costs will be incurred by many property investors in these suburbs as a result, so unless you’re planning to invest heavily in your Western Sydney abode, then you may want to reconsider your investment.
Now I’m not saying any of this to scare you, but rather to ensure you’re informed and making the best decisions moving forward to help you reach your wealth creation goals.
Lack of knowledge can be the undoing of many aspiring investors
That’s where a proficient buyer’s agent can bridge the gap between where your own knowledge and experience wavers.
If you’re worried about the cost of employing a buyers agent, you’ll need to weigh up the immediate cost vs the potential future savings and reward.
Risk vs Reward
Property investment offers a ‘risk and reward’ approach to wealth creation, since the unpredictable can happen.
Yet, as smart investors, we do what we can to reduce the risk to increase the reward.
All it takes is an investment in knowledge and experience to gain the upper hand, and there’s a wealth of that available to you in the form of buyer’s agents.
If you’re considering buying an investment property in Sydney, and particularly in the western suburbs, a good buyer’s agent will know about all of the above issues and then some.
It’s their job to have in-depth knowledge of the areas they work within, in terms of infrastructure issues, future planning concerns and vacancy rates.
They will also know the pockets of high-performance, solid investment properties and those that match your criteria, which is vitally important to the performance and future of your portfolio.
There are many hidden ‘red flags’ when it comes to purchasing an investment property and you should never rely on real estate agents or property managers alone to give you knowledgeable and honest information, because they have other interests to maintain.
A buyer’s agent is there to help YOU make a successful property purchase.
IN SUMMARY: red flags for buying in Sydney:
- If it’s a fibro home and built pre-1986, you can be assured it has asbestos. Even if it’s cladded, tenants and trades people still drill holes and affix nails through the cladding. Check the roof sheeting too on older homes.
- Even if it’s a brick home, asbestos can be found in the lining of the wet areas, bathrooms, kitchens and laundries. Always find out the year the property was built.
- Obtain a pest and building inspection report before you commit to a purchase. An outlay of a few hundred dollars may save you tens of thousands of dollars in the long run. This applies to every property you’re considering, not just those in Sydney’s western suburbs.
Of course it must be said that even with a buyer’s agent on your team, you must also undertake your own research and do your due diligence before purchasing any property.
It always pays to invest in your own knowledge because at the end of the day, the buck (quite literally) stops with you.
Thinking of investing?
If you want to take advantage of the opportunities our property markets will offer you now is a good time to consider your options.
If you’re looking for independent advice, no one can help you quite like the independent property investment strategists at Metropole.
Remember the multi award winning team of property investment strategists at Metropole have no properties to sell, so their advice is unbiased.
Whether you are a beginner or a seasoned property investor, we would love to help you formulate an investment strategy or do a review of your existing portfolio, and help you take your property investment to the next level. Please click here to organise a time for a chat. Or call us on 1300 20 30 30.
When you attend our offices in, Sydney, Melbourne or Brisbane you will receive a free copy of our latest 2 x DVD program Building Wealth through Property Investment in the new Economy valued at $49.