Buying an investment property is never without risks. However, there are some basic guidelines we can provide that will help you narrow down your search and help you find a sound investment property.
Simply following this simple 15 point checklist can help you seek out the properties with the most potential and the least risk.
Tip time! The top 15 suggestions from the team at Elephant Property:
1) Choose a property that is well-built and free from defects. Look for low-maintenance homes that won’t require expensive upkeep and repairs. (We recommend that unless you’re a builder yourself – always get a building inspection performed either prior to signing a contract or as a condition of it.)
2) Look in areas that are safe and have a positive atmosphere. If you feel a bit unsure about going there, chances are the quality tenants won’t like it either.
3) Check the local services and amenities. Things like a close proximity to shopping centres, beaches, parks or sporting grounds will make the property more appealing to tenants or future potential buyers. Great schools nearby are often a good indicator that the property should have a built in tenancy demand.
4) For your first property especially look for homes within the median price bracket. Being priced in the middle of the field will make it easier both to rent out and to sell later on.
5) Look for areas with strong and steady (rather than seasonal) employment opportunities.
6) Properties located in areas of increasing population are great to watch out for.
7) Research infrastructure in the area. There should be enough facilities (check both existing and planned) to support the needs of the community. Especially consider things such as school opportunities, roads and traffic and public transport to/from the area.
8) Confirm the history of capital growth in the area. Especially look for suburbs/areas that show a strong history of capital growth over time.
9) Do some research on what is currently available for rent in the area. What rental prices are they achieving? And how long are properties vacant between tenants on average?
10) Try to locate areas that (while meeting as many of these criteria) have only a limited supply of homes available to rent to ensure that demand for your investment property remains strong.
11) Buy a property that you’d feel comfortable living in. It doesn’t have to be a mansion, but neat, tidy and liveable are all good starts.
12) The bank says you can afford $300,000 – well great – but it doesn’t mean you have to spend ALL of it! Take into consideration that your income or your partner’s may change, that the property may be vacant and that repairs and maintenance will (not may) occur. We recommend you buy a property within your limit that still allows you to sleep at night!
13) When you find a property that you’re considering making an offer on – call a property manager to confirm the potential rent. As much as we love sales agents, the rent they quote you may not be quite as accurate as they don’t deal with rental properties all day like us. Most property mangers will provide you this estimate free of charge.
14) Are you a first home owner? Best to chat with your lawyer here about the time you’ll need to live in the property if you still want to claim the first home owners grant.
15) And finally – we highly recommend Jan Somers books for all Australian residential property investors. Grab them here.
Got more questions? We’d love to assist – simply contact us and let us know how we can help.