What to look for when finding the right property investment?

Once you’ve made the decision to invest in property the next step is to find the property that is right for you. Many factors come into play when making this vital decision. Consider the following before adding to your investment portfolio.

Why invest?

First up, have a think about your reasons for investing. Are you interested in capital growth, or are you motivated by cash flow? While more exclusive suburbs may have a larger potential for capital growth in the long term, buying into them is expensive and these properties often have lower rental returns. If your returns need to be higher than your outgoings, consider properties in more affordable areas. It’s important to put emotions to one side when buying an investment property; remember this isn’t your dream home.

Where to invest

When deciding where to buy, look for growth areas where there is a high demand for rental properties. The perfect property will be close to transport, schools, parks and shops. When looking at properties, take time to go for a walk and get a feeling for living in the surrounding area. What attracts you to the property will also attract potential tenants. Also take note of any red flags that will put tenants off. Research crime statistics – no one wants to live in a dangerous neighbourhood.

Know what you can afford

It’s vital to know your budget and have a good understanding of ongoing costs before you invest. Talk to your lending institution or a mortgage broker about pre-approval for a loan and research the cost of insurance, rates, improvements and repairs. Allow money for a building inspection and consider whether you will need the ongoing services of a property manager. Once you know how much you can afford to invest, you are in a strong position to start looking.

Consider demographics

As a landlord, it’s important to consider a property and neighbourhood that will appeal to your ideal demographic. Residential, single-family dwellings are popular with first-time investors as they attract stable, longer-term tenants. Always consider the needs of the demographic you are trying to attract when purchasing.

Do your due diligence

Before you buy a property, be sure to do your homework and make yourself aware of any issues that may affect that property and impose restrictions or obligations on you. Always ask for the Vendor’s Statement or ‘Section 32’ when purchasing a property. The Vendor’s Statement contains items such as a statement of title and copy of the plan, the zoning of the property, any council proposals for the land, the services that are connected and information on owners’ corporations. This is all vital information which must be supplied to you. It is prudent to obtain legal advice before purchasing to ensure there will be no unexpected surprises.

Follow this advice and no doubt your ideal investment property is just around the corner! Start your search here: www.hayeswinckle.com.au/buying/

Written by Kate Shaw