First of all, let me state that I really dislike the term ‘investment grade’ when it comes to property. Whenever I hear that term I think of property built for tenants. Hard wearing surfaces, cheap fittings and smaller internal areas.
While some might argue that is acceptable to tenants (I disagree, the better the finishes the better the potential tenant) it certainly does not provide the highest likelihood for capital growth. After all, owner occupiers make up over 60% of all property buyers and they are more likely to pay a higher price for a property that pulls at the heart strings. If you are a home owner buying your ‘forever home’ or a property in a location that has your favourite parks and restaurants you are more likely to pay above the market to secure that property.
After all, if it is your forever home and you are going to live in it for 20 or 30 years what does an extra $40,000 or $50,000 matter? While that may be true for owner occupiers, it couldn’t be further from the truth for investors. A high-quality property bought at the wrong price does not make a good investment.
At Nyko Property we believe that investors should buy owner occupier grade property for investment. That means, buying a property that fits the demographic in that area in terms of size, amenity (bedrooms) and finishes. Of course, you cannot go too far and overcapitalise, however buying a property with an acceptable level of finish for owner occupiers in that location gives you the highest likelihood for above average capital growth.
Buying a property that appeals to 100% of the property market, not just the 40% of investors, offers you the opportunity to maximise competition and create emotional responses that can often get you the best price.