Mortgage brokers, especially in the Rockingham and Baldivis areas, have seen a sharp increase in home loans taken out by small property investors. Many are investing self managed superannuation funds and many are investing without using their funds. Whatever the demographic, a lot more Australians are using property investing to ensure their futures and to retire earlier.

We recently read about how one small investor reaped the benefits of $250,000 capital growth over a six year period and walked away with $192,000. She had not been successful with investing before and a mentor told her to concentrate on four factors. She was able to find the perfect property.

Four Important Factors that can Provide Capital Growth

The first factor is that the area must be growing. Anyone who has lived in Rockingham, Kwinana or Baldivis, which has a reputation as a “hot” Perth suburb, knows how property values rise in a growing area.

For this investor, the second factor was to find a property that she could both renovate and subdivide. This allows the investor to add value. The third important factor is to try and find an undervalued property. This can be tough in a competitive era, but it is worth being patient for many investors.

The final factor was to buy in an area with great infrastructure that is expanding to be even better. Once again, the Rockingham and Baldivis areas are perfect examples of expanding infrastructure.

The Property

The property was a Melbourne area block of three 2-bedroom units. It was going on sale for $450,000 and she offered $390,000. They quickly came to terms at $410,000. She did mostly cosmetic renovations on her own and was able to subdivide the units, making them three separate entities.

The property’s value would increase from $450,000 to $700,000. She walked away with $192,000 after costs.

To learn more or to enquire about a home loanx, call (08) 9527 1800.