What to look for in an investment property

What you look for in an investment property will vary slightly depending on whether you want a positive geared property or negative geared property and your overall investment strategy. For a general idea on what to look for, follow these tips:

1. Rental Income
While it’s not the only thing to consider, it’s an important factor to take into account when purchasing an investment property. The rental income, minus the home loan payments and other expenses will determine if it is positively or negatively geared property.

2. Capital Gains
What is the projected growth for the area? Is there new infrastructure planned? Is employment high and is the location going to be in demand for the long term. Properties close to the CBD are typically good properties for capital gains.

3. Vacancy Rates
Check the vacancy rates in the area. If there are a lot of homes up for rent but they are sitting vacant, it won’t be easy for you to secure a tenant either. This will impact your investment and cash flow.

4. Sources Of Tenants
Does the area have a good source of the type of tenants you want? For example, properties near universities are likely to be popular with students and often means a property will remain in demand.

5. Surrounds

Properties close to public transport are more desirable as they are easier to lease and resell. Consider the proximity to schools, hospitals, shopping and other resources people want close to them. The more central a property, the more popular it is likely to be.

6. Age

How old is the property? If you are buying a brand new property or off the plan, thoroughly research the builder/developer and others involved to ensure you know what you are signing up for and that you get what you pay for. If you are purchasing an older property, make sure it is structurally sound, check for any renovations and repairs which will need to be done soon or the quality of any which have been done. Get proper pest and building inspections and check the energy rating for the property. All these things can have an impact on the resale value and rentability of the property.

7. Ability To Add Value
Buying a property with capacity to increase the value not just through capital growth but also through adding value can be hugely beneficial. If you purchase a home and can immediately do a few things to increase the value, you will have more equity in the home and can expand your property portfolio quicker. Furthermore, increasing the value of the property often means you can increase the rent as well.

Investing in property can be an exciting and lucrative way to increase your wealth. Talk to one of our brokers today to find the right investment loan for your needs.



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