The key to capital growth in property is resale value. So, how do you determine what sort of property is likely to sell well in the future?

As a general guide, we recommend you look for the following features when considering whether a particular property is likely to be an above average performer in the capital growth stakes.

1.  An architectural style that is compatible with the area. For example, a Victorian terrace in Paddington is something that the majority of buyers in that area are looking for. So a 1980s cottage in the same area, no matter how nicely presented, is always going to attract less interest from buyers.

2.  A good, quiet street – not a main road. Tree-lined is the ideal, within an easy walk to amenities and public transport. In every suburb there are specific streets that carry a certain cache – and buyers are often prepared to pay a premium for these addresses. Just think of Telegraph Road Pymble.

3.  The ideal aspect is a garden facing north or north-east. If buying a semi-detached house, look for the one where the windows are on the northern side. Good natural light is what you are after, particularly in the living areas and garden.

4.  The floorplan needs to make sense, with good flow and balance. An unbalanced house would be one with 4 bedrooms and a tiny living area or limited outdoor space. An example of poor flow is where you have to walk through the laundry to get to the courtyard, or where the bathroom comes straight off the dining room. The only exception to this rule is if the floorplan can be simply rearranged without significant structural work.

5.  Parking is always preferable to no parking, however there are many inner city areas where there simply isn’t the availability. So in the absence of off-street parking, make it is easy to get a space on the street.

6.  Aussies love to live alfresco, so usable outdoor space is always a big plus for resale value.

7.  Good property doesn’t always have a view, however the best properties do have some sort of outlook. This can be as simple as ensuring each window looks out onto garden. You could plant a climber so you look at greenery instead of looking at fence palings. Or a row of bamboo or pine trees to obscure the house next door. If you can’t obscure an ugly outlook or rectify a privacy issue, don’t buy the property.

8.  Presentation of properties for sale can be misleading. It is easy to fall in love with the appearance and trimmings of a styled property and fail to see the nuts and bolts of what is actually for sale. Conversely, it is just as easy to overlook a fundamentally good property simply because it hasn’t been tarted up for sale. In fact, you might be able to add immediate value simply by addressing the presentation. Great examples are tenanted properties and those owned by older people who have dated colour schemes and furnishings.

9.  The condition of the property can set it apart. A well maintained property will need less money spent on it that one that has been neglected. And any savings you make in upkeep go straight to your bottom line come sale time.

When taking into account these general attributes, it is important to note that every micro-market has its quirks and it would do you well to understand these. For example, a weatherboard house in Balmain is not going to be worth less than a brick one, but in more recently developed areas there will be a significant price difference. If you understand the primary elements of a good property and combine this with local knowledge, you should be well on the path to a successful real estate investment.

In my experience real estate agents typically fall into one of two categories – “deal doers” and “process people”.

The first, and most common, are the deal doers. These are agents who jump to action when they have a buyer on the hook. They won’t let a deal pass them buy. They are opportunistic and often charismatic. They thrive on a sale and know that the only way they get paid is to sell, sell, sell, and they never lose sight of this.

These agents are able to understand their vendor’s motivation and are able to find out their bottom line. They are very focused on managing their vendors price expectations (otherwise known as conditioning) so that they can get a deal together in a timely fashion once they have identified a buyer.

The more skilled agents in this category will be very charming and persuasive and you will want to buy from them, even if the property they are handling isn’t ideally suited to your needs.

The less skilled “deal doer” agents will resort to playing games and being a bit liberal with the truth. So you are unlikely to trust these guys as much and will probably not want to buy from them unless they happen to be selling a property that really suits you.

Regardless of their skill level, a quick sale is a good sale in their eyes. So negotiate hard and decisively, preferably with a signed contract and a walk-away price.

The second group of real estate agent are process oriented and much less focused on getting a deal across the line, often lacking the necessary negotiation skills and nearly always inadequate when it comes to reading people and their buying signals. Often inexperienced (although some dinosaur agents can be like this too), they will be lead by their owners, who generally don’t know how to negotiate either. They couldn’t manage their way out of a wet paper bag so the chances of them having their vendor’s price expectations under control are close to nil. Not only that, but quite often they haven’t even worked out that without covering this crucial base they are less likely to get a sale. And they don’t have the skills to close the gap between a buyer at a low price and a vendor at a high one. Quite often we come across these agents presiding over an overpriced property, where they don’t even realize the price is too high and they have a level of arrogance about buyers who they seem to perceive are simply being cheap.

Typically these people follow a very rigid step by step process and aren’t able to roll with the punches. They don’t think on their feet and won’t know how to handle a curve ball. C follows B follows A and don’t get the order wrong! So now is not the time to get creative with your offer and try to negotiate on things like inclusions, settlement periods and lease-back arrangements. Whatever you do, don’t confuse these poor souls!

Generally those who are the worst negotiators will give you the least information. They don’t know how to use information to get an outcome. So buyers get frustrated with them and sometimes even give up in disgust. Or they dig their heels in and nobody gets anywhere.

These are the sorts of agents you have to give a low offer to as they won’t know how to present a decent offer to their vendor. By starting off at a figure less than you are prepared to go to you will be conditioning the vendor (because we know the agent hasn’t been) and allowing our friend to look like he is negotiating. So when you finally get to the point of submitting your final offer, the vendor is better prepared to recognize it for what it is and hopefully accept it.

You might get the feeling that I don’t like dealing with these “box ticker” agents. And you would be right. But we always keep our eye on the prize and act accordingly in our negotiations.

In order for a property to grow in value you need to get it for the right price and then it needs to attract interest from buyers when you go to sell it. The secret to capital growth, then, is to identify a property with the characteristics (or the potential) to generate this interest in the future.

The first rule is don’t pay too much in the first place! So don’t fall in love with a property and let good judgement fly out the window. Do your research so that you can understand property values in your chosen area and make sure you pay no more than a fair price. The thing to remember in a buyers market is that there will continue to be opportunities until the market heats up again.

The second rule is to be very selective with the property that you buy and do not let the idea of a “bargain” cloud your vision. Most bargains are heavily discounted because nobody wants them. And nobody wants them because they are sub-standard so getting them at a low price is really a false economy as their rate of capital growth will be lower than that of superior properties. There is a difference between a bargain and being opportunistic, however, and being opportunistic requires fast action, as opposed to a bargain, which has probably sat on the market for some time.

Keep in an accessible price bracket. Find out the median price for the area you are looking to buy in and aim to spend a maximum of 10% over that figure. This way you will ensure that the property you buy will be in the more affordable price bracket when it comes your time to sell. (Unless, of course, you are preparing to do major renovations.). There are more buyers with a budget around the median price range than there are in the top 30th percentile, therefore there is more chance for competition. And it is buyer demand that ultimately drives up prices.

Choose a prime, proven location. You can usually improve a property but you can’t fix a poor location. A desirable street will always attract buyers. So this is the safest way to give you the best chance for capital growth.

If you have a long term plan you can try to pick an up and coming area. This is a riskier strategy, however, because there are no guarantees. Wooloomooloo and Waterloo, for example, are both in an extremely convenient inner city location and bordered by some prime suburbs. Surely they would have to be the next hot spot! However there is a crime element in both suburbs and big things would need to happen in terms of the social mix before the balance is likely to change. But if it does change, you can expect values in these areas to rocket.

Choose the type of property that will appeal to the largest group of buyers. For example, young professionals love the buzz in inner city areas like Surry Hills and family buyers prefer a quieter existence and larger land size in areas like Haberfield. So buy a property that is appropriate to the dominant buyer in the area.

Stay away from high rental yield properties with limited capital growth prospects, like student accommodation. Any property that has a limited market is going to have limited capital growth opportunities. The best option is to go for a property that appeals to owner occupiers and investors alike.

Don’t overcapitalise on renovations. But do make sure you renovate to the required standard in your suburb. Get out and about and see what sort of finishes buyers like. If laminate kitchen benches are the norm, don’t waste money on stone. Conversely if top brand kitchen appliances are a must, don’t scrimp and go no-name. The trick is to keep your personality out of the equation, keep it neutral (without being bland) so as to appeal to the widest group of buyers.

Finally, don’t rush your purchase. Time is on your side in a buyers market. If a vendor has unrealistic price expectations, ride it out and wait until they are read to accept what the property is worth. Maybe you will get it for even less as the longer their property sits on the market the more the perceived value drops in buyers’ minds. If the property you are looking at falls short of your criteria, don’t feel pressured to make compromises. You can afford to wait for a better property.