Are you looking to purchase an investment property?
It’s important to note what you like most about a home, and empathise with potential tenants so that you’re choosing a property that appeals to renters as much as it does to yourself. Without doing this, the property won’t deliver the kind of returns you’re after.
Here are some tips that will help you:
- Do your research! It’s important to know your market; i.e. what kind of property is in demand (or will be in the future) in a particular suburb or area. You can do this by looking online, checking advertisements, talking to property managers such as the team at Red & Co and talk to buyers’ agents.
- Look at the property’s future capital growth. Rental returns are important, but it can be just as important to gauge capital growth, especially if you’re planning to negatively gear a property.
- Does the property have easy access to public transport and/or is it close to the CBD? See our articles on how to get more rent and Brisbane’s Top 5 Renovation Suburbs.
- You want to buy a property that is close to the suburb’s median price for that type of property, whether it’s a house, townhouse or apartment. For example, if the property is worth $1 million and the rental income is $1000/week, you want to ensure that if the property is more expensive than that, the increase in rent is proportional. If a property in the same area is worth $1.2 million, then you would want around $1200/week in rent.
- If you are going for new apartments or townhouses, you need to research the developer and builder to see what other projects they have done. Ideally, you want these people to be experienced with a proven track record of success. You can also get in touch with the current tenants to see if they’re happy.
- Research to see who the likely tenants are in the area. For example, is there a university nearby meaning student accommodation will be in demand?
- Of course, suburbs close to the CBD deliver high returns. Those areas tend to be popular regardless of property type.
- Try to avoid falling into the trap of focusing on properties with cheap strata levies. Often, cheap levies mean that the building doesn’t offer high quality facilities or amenities that tenants are looking for.
- Another thing to avoid is getting emotionally attached to an investment property. You have to remember at the end of the day, it’s an investment property. You’re buying it mainly for rental returns and capital growth. Take the personal and final touches out of the equation – you can’t afford to do that!
- Do your research on how well both primary and secondary schools perform in the area of your property. Education is crucial to families so try to buy your investment property in a catchment area full of good schools, particularly if your target tenants are families. As your city grows, accessing schools becomes even more important over time. There are very few new schools popping up so if you can buy in catchments of great existing schools, you will be well ahead of the game from a rental and capital growth point of view.
If you’re ever having any doubt when purchasing a new investment property, you can always reference these guidelines or get in contact with a Red & Co staff member on 1300 88 73 28. They will be happy to assist in any way and give you peace of mind when you’re looking to source an investment property.