Investigation
What to look for when choosing an investment property
Purchasing a property to rent out continues to be one of the most lucrative ways to invest your money, increasing your wealth and helping to secure your financial future. Researching is a crucial part of this process to ensure long-term capital growth and to allow you to reach your financial goals. We are currently experiencing low vacancy rates and attractive rental yields across Brisbane, in addition to low interest rates and relaxed lending criteria. It seems that it is the right time to purchase an investment property, but there are numerous other factors to consider before pulling the trigger. If you are looking at purchasing an investment property, each of the below should be a pivotal part of your research…
Type of Property
Once you have decided to purchase an investment property and established your investment strategy, the type of property you look for is generally the next decision. Townhouses and apartments generally require less upkeep than houses with large backyards or pools, however apartments can have higher ongoing costs. The demand for certain types of properties will also be determined by the demographics in the area. For example, if the property that you are interested in is located near a University, then smaller, low maintenance apartments are going to be more desirable for your target market. If the property is positioned near a school, the likely tenants are going to be a family who will require more space than an apartment allows.
Top Tips!
- Research the demographics of the area (eg. age, education & professions)
- Take into account the costs associated (eg. body corporate for apartments)
- Consider nearby amenities & what will appeal to those who frequent them
Position of the Property
Areas that are expanding in terms of population, economy and infrastructure are generally considered a good place to start when looking for a location to invest in. There are of course other factors to consider, such as an oversupply of certain types of properties, but for the most part inner-city suburbs will generally have a high demand for rental properties. Becoming aware of any upcoming developments that may occur within these areas is also important as not only can it impact the type of tenants you attract, but also the value of your property in the future. If you are not familiar with an area, you may also want to investigate further statistics and speak to some of the locals to get a feel for the location.
Top Tips!
- Contact local council & search government websites for future/planned projects
- Do your own research on the area including crime statistics & vacancy rates
- Talk to locals & learn first-hand what it is like living in the location
Amenities near the Property
Directly linked to the type and position of the property, the nearby facilities will impact your likely demographic of tenants. Sought-after amenities to look out for when purchasing an investment property include easily accessible public transport, shopping centres, schools and hospitals. Properties that afford easy access to these services are not only desirable for their convenience, but also employ a number of people that require nearby accommodation. Purchasing an investment property near a hospital will see doctors, nurses and potentially families of long-term patients as your likely tenants. These people are all time-poor, so a low maintenance property within walking distance to the hospital to avoid expensive carparks would be ideal for these demographics.
Top Tips!
- If the property is near public transport, research the frequency of services
- Talk to local business owners for more specific descriptions of regular customers
- Consider the budget/income of your most likely tenant to price rent accordingly
Presentation of the Property
The presentation of your investment property can mean the difference between a consistent long-term rental return and struggling to secure tenants. You can have the right property, in the right position, with the right facilities nearby, but if the presentation is poor it can be detrimental to your rental income and the quality of tenants you attract. If you are looking to add value by completing renovations or repairs, take into account the age of the property as there are limitations to undertaking work on properties of a certain age. If you want a property that is ready to rent immediately, take note of the fixtures and fittings including carpets, curtains and cabinetry as these can be updated/repaired for minimal cost in a short amount of time.
Top Tips!
- Use neutral tones for painting & decorating to appeal to a wide variety of tenants
- Small changes make a big difference eg – change out old curtains for new blinds
- Ask yourself ‘Would I be happy to live here?’