What to look for when buying an investment property

Generally, when buying an investment property, there is less emotion involved than when buying a home to live in. Obviously, you will want it to a good area, be of good quality, produce reliable yields and have potential for growth.

So, what are the types of things you should be considering when you are looking to purchase an investment property? Learn more in this video, where Joanne Danckwardt provides insights on this type of purchase.

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Income and Capital Growth
Capital growth refers to the increase in the value of your rental property over time. As an example, if you invested in an apartment costing $500,000 two years ago, and sold it for $550,000 today, the apartment would have a capital growth of $50,000 or 10%.

Both capital growth and rental income rely on a number of factors such as:

• Location
• Recent sales prices in the area
• Current rental prices in the area
• Interest in the area – current and predicted future interest. Do your research, and find out what areas do well in the rental market.
• The type of property
• The amenities of the building if it's an apartment or amenities that are close by eg – schools, shops, transport,

Aesthetics

While it might not be a home for you, it will be a home for someone (your tenant!), so it should be appealing to a broad range of potential tenants. Make sure it is clean, well maintained and has a good layout. You should also consider the age of property.

Location, location, location         

Location is key to valuable real estate. A great location will remain an asset no matter how the real estate market fluctuates in the future, meaning you don't have to predict the real estate market. Consider the accessibility to transport, shopping, schools and other amenities, the appearance of the neighbourhood, development plans, and area crime rates. Use the opportunity to visit open homes in the area, ensuring you know relevant questions to ask at an open home to obtain a clearer idea about the area.

Features

Ideally, you want the property to appeal to the greatest number of potential tenants of various ages and segments to ensure you have access to a wide market. Try to find a property that has something a little extra, for example, a 2^nd bathroom, a lock up garage, or a study nook.

Long-term

Remember that property is a long-term investment. Ensure you can maintain repayments over the length of ownership. Budget for what might happen if the rent does not cover the mortgage, bills, rates, etc, and ensure you have a finance backup. Remember you should always factor in costs associated with buying when looking for an investment property.

If you are looking for an investment property to buy, request to be added to our open home alert 

YES, ADD ME TO YOUR OPEN HOME ALERT

If you feel you could benefit from our experience with buying, selling, and property management we’d love to hear from you. Simply reach out or view our current for sale properties. We hope that has helped you today. If you have any questions, we’d love to talk to you. Our number is 0426 264 771. We look forward to talking to you soon.