How to pick the right investment property for you.
So you’ve decided to park your money in real estate as your investment of choice. Smart.
We’ve compiled a few do’s and don’ts for you. Here’s the scoop;
Don’t get emotional. The idea that you should buy a property in the street you live in because you know the area, is not always your best bet. Be careful with this strategy as we find most people that buy an investment property this way are thinking with their hearts rather than their heads.
Consider things such as access to transport. An area which outperforms other areas, typically has a train station and good amenities. Does the suburb you’re considering have good access to public transport?
Think about your risk profile. Have you heard a property investment ‘specialist’ spruik Perth, a mining town or other high risk venture? Some people may have had great success with this, but for every positive outcome, we’ve heard 5 horror stories. If the purchase doesn’t make sense to you, just don’t do it.
Good rental return doesn’t necessarily mean a good investment. Yes, of course these are numbers you have to consider, but the investment strategy we employ for our clients focuses on capital growth. Student accommodation has some amazingly high returns, some sitting at around 7%! Sounds amazing doesn’t it? The amount of money you will spend transacting that property often makes it not worth it… Not to mention, the chance of capital growth is slim to none!
Know what you are getting yourself into. If you buy an apartment as an investment, this comes with body corporate fees. Yes, they are tax deductible but they can quickly eat into your rental proceeds. Buying a house as an investment property? Great, no body corp fees. However, depending on the age of the property it can often mean high maintenance costs. (hot tip – this is why we always suggest getting a building inspection on properties our clients purchase.. it’s a great way to be aware of any upcoming maintenance).
Think about what tenants want. Would you live in a house with a pink bathroom? Or no dishwasher in the kitchen? No heating or cooling? Maybe yes, maybe no.. But these are all reasons why tenants will be less likely to consider renting your property. Try and make it as appealing as possible to tenants. Paint walls white. Install reverse cycle heating/cooling. Why? It can be tax deductible. It will help lease your property quicker.. and keep tenants in longer.. All equalling saving you $$!
We hope these tips are useful in your hunt for a great investment property!
Feel free to reach out for a chat if you want us to help out.
Regards,
Tabitha