Choosing and buying an investment property is a financial move quite different from buying a home and comes with its own unique challenges. It should be a product of a smart, logical set of financial decisions.
The goal here is not to purchase a property to give one domestic comfort, like when buying a home. The main purpose is of course, to earn from the investment, much like passive income.
Here are some tips to help you choose an investment property:
Property investors often go for areas that are familiar to them
Investors often buy investment properties in areas, which are familiar to them. But keep an eye out for opportunities in other suburbs, towns, or even cities, where the property cycle may be at a more beneficial point for investing.
How to know where your area is in the property cycle? Check the direction of the trends in auction clearance rates, price discounting and average time to sell. Also look for positive developments happening in the area (road constructions leading to the city, new commercial establishments on the rise, etc.) Neighbouring areas experiencing good capital growth is also a good sign.
Properties that cater to a certain demographic profile.
This is like having an existing demand so you know exactly the kind of tenants and potential buyers that will be attracted to your property. If the area houses a university or hospital, perhaps you can be sure that units suitable for students and staff will be a popular choice. It also pays to check the number of renters in the area as a percentage of total occupants as this will establish the size of your tenant pool.
Tenant-friendly.
Consider what want your tenant wants and needs. Meaning, necessities such as proximity to public transport, work/school, and health care are a must. A balcony, internal laundry and car space are all desirable by tenants. It's ideal to be able to tick every box when buying an investment property however, often comprises and trade offs have to be made.
Now that a different sort of economic wave is out there, carefully choosing an investment property is more important than ever. Your reliable buyers agent can help you out.
