Finding a great investment property requires due diligence and discipline around the organisation of your finances.
You need to be on top of mortgage and tax obligations, as well as potential income and tax benefits from negative gearing and write-offs.
Focus on the anticipated financial benefits from an investment property: are you seeking an outright profit from day one, or is the purchase strategic to minimise tax or develop a long-term wealth portfolio.
As an experienced agent in our suburb, I always suggest to my investor clients that they seek professional financial advice to avoid unforeseen costs.
Picking the right property in which to invest requires an equal amount of attention. And if you’re looking at an investment property right now, you’re likely ahead of the curve.
While property prices are strong, city rental markets are beginning to recover following the Covid-related exodus of students and casual workers who make up a significant portion of renters.
To help you in your search, here are nine critical considerations in deciding on an investment property.
- Vacancies – Always look at the number of vacant rental properties in your target area. You don’t want to invest where there’s an oversupply or somewhere that doesn’t attract good quality renters.
- Rental income – Compare the rents being asked for similar properties. Can you make your numbers work at the going rate?
- Future developments – Are there any significant developments about to come on to the market. A release of several hundred apartments places pressure on rental incomes and can result in a short to medium-term fall in values.
- Employment – Areas with readily available work are excellent locations. Find out about local employment opportunities in your target areas. If there is a strong hospitality and casual workforce, which is usually evident in tourism centres and university towns, this is great news.
- Entertainment – Finding a location close to cafes, restaurants and movie theatres is gold if you want an apartment with young professionals as tenants.
- Neighbourhood – The locality will influence the type of renter. Any location near a university or major hospital will attract students and lecturers, and doctors, nurses, and others employed in hospitals.
- Schools – A rental property near a school is a winner, especially if you’re thinking of investing in a house. Families who rent are usually longer-term tenants. If education requires a long bus trip, you’ll struggle for a tenancy.
- Crime – Seek advice from local police or check the internet for local crime statistics. Vandalism and petty crime can drag down the value of your investment and diminish rental returns.
- Council rates – Do due diligence on your favoured locations. You might be surprised at the difference from one council area to another.