It’s hardly a secret, virtually every Australian would love having an investment property of their own.
Judging by the consistent long-term performance of real estate in Australia over the years, is there really any better way to increase your wealth and secure your financial future?
Yet, despite the consistent performance of property, few actually take the plunge, for fear of failure, or taking a short-term point of view. While those who do, seldom look back.
By considering and evaluating a few important factors when buying an investment property, you can achieve a surprising and impressive return on your investment.
The choice of property is crucial. Based on our own experience, and in order to help you make the right choice, here are a few things we think you should consider first.
What’s your strategy?
It’s important to assess your own investment needs and expectations, and understand the type of investment you want.
Before buying an investment property, determine your strategy:
Are you buying the property to renovate and sell for a quick profit?
Do you want to hold onto it for the long-term?
Are you investing to build wealth, improve your cash flow or manufacture equity?
It’s also important to consider the type of tenants or prospective buyer for your investment.
This will influence the type of property you buy and where you buy it. For example, a young professional couple with children will want to be near parks and good schools, while young, professional singles will probably look for a stylish terrace or an apartment in a secure building close to transport, shopping precincts, and a café dining culture.
You also want to do your research before you buy a Stratum titled property. Strata title is a form of ownership devised for multi-level apartment blocks and horizontal subdivisions with shared areas. When you buy into a body corporate property, you’re buying into a complex with other owners. This means that you own your individual property lot but you share ownership of the common areas, such as pools and gardens, with the rest of the owners. Many homeowners and investors across Australia buy strata titled apartments without understanding what the body corporate is all about.
Selecting the right property type
There are many factors to consider when buying a property but the failsafe, golden rules remain:
As they always say, it’s all about the location, location, location. Look for areas where high growth is expected, in other words where there is potential for capital gains.
By purchasing in an area or suburb that’s up and coming, with the potential for growth, this could quickly increase the value of your property in the future. It’s also important to consider the proximity of amenities for day-to-day life: shopping centres, parks, schools, public transport, café culture and community living.
Depending on your investing needs, quiet, leafy streets away from main roads, which can be dangerous for children and pets, always attract family friendly tenants.
You should also consider purchasing in an area where rental income is higher than the property value. Ultimately this can help to ensure consistent and maximum returns.
Evaluating the investments potential for growth could have a huge bearing on the property’s value. A larger block of land (or external size of your apartment) could accommodate a second storey, an extension or additional freestanding structures within the garden, such as a garage, or pool. It may also be eligible for future subdivision.
There is no denying that the size of the property and the perimeter of the land, will add value and higher returns in the future.
Select a property that would appeal to a range of tenants, and one that will produce an emotional outcome when selling. This means, choosing a property that is highly desirable by both owners and occupiers.
In demand properties are those with functionality, additional features and luxuries for inspired living. You should consider the number of bathrooms and bedrooms, storage space, heating and cooling, living space, outdoor entertaining areas and car parking, either an existing garage or on site parking. You will attract tenants and future owners with a property on an elevated block, which may have attractive views.
You can also maximize a properties rental income, simply by identifying the key personal requirements of your prospective buyer or tenant.
Finally, orientation affects the amount of natural light that hits the property and how it casts throughout the day. Buy a north-facing property with windows that allow for the best of our daily natural light to filter in on your property, inside and out. Not only is natural light pleasant and uplifting, it’ll save you an unbelievable amount on lighting and heating costs in the cooler months.
It doesn’t matter if you’re a novice or experienced property investor, selecting the right property, in line with the few basic considerations above will provide you with a solid foundation for an investment of your own.
You should always consider your personal objectives, and look at the bigger picture. Take the emotion out of it, ask yourself the big questions and that way you will know exactly what you’re investing in, how to add value, and what the maximum return on that investment property will be.
We hope the tips help and wish you the very best with your future property pursuits.