What to look for in an investment property

If you were looking to buy a property for yourself, you’d be counting on certain features to be included right? You’d want security, a certain size backyard, proximity to shops and transport, perhaps you need 2 bathrooms, or how about garage space?  This is no different to when a tenant is looking for a property to rent.

When you are viewing investment properties, always keep potential tenants in mind. Just because they are not buying a property, doesn’t mean they don’t want the same luxuries as a homebuyer. 

Here are some tips on evaluating a potential investment property:

Doing the numbers

  • Determine why you are investing in property, what is your goal? For example are you investing to help you pay off your home mortgage sooner or have you already paid your home off and you’re looking for ways to improve your retirement income. Both these options need a different strategy and without knowing what that is, you won’t know the type of property you need to purchase to produce the end result you desire.

  • Check out the expenses you can claim from the ATO website. This can be vastly different depending on the age of the property and will help you choose a property that suits your strategy.

  • Calculate the cost of your investment - If you need the property to pay for itself, do the deductions + rent = good ROI (return on investment) or do the expenses far outweigh | the income?

Finding the bricks and mortar

  • Research, research and more research - Watching the rental listings in your chosen area will give you an idea of what properties are in demand. It’s also good to check that the rental vacancy rate in your desired suburb is the same or lower than state's average.

  • Are you buying in an existing apartment block? You can knock on doors to see if neighbours in the area are happy with the location.

  • Is public transport close by?

  • What is the crime rate of the area?

  • How close is the property to the CBD?

  • Is the proximity to Schools, Tafe, Colleges or Universities important to your target market?

  • Are there amenities in the area such as sporting facilities, childcare, community groups, parks etc

  • Will this new property benefit from potential development opportunities in the area that may affect the growth of your investment?

  • Is the area prone to natural disasters; and if so, is this worth the risk?

  • Does the property suits the demographic i.e. a property suitable for students near a university would be different to a property that suits a family. 

Need help with your next investment?

PEB Property Group can help you get the investors edge and become a smart property investor with a free consultation.

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PEB Property Group is a complete financial planning advisory service for Perth families. Offices are located in Inglewood and Willetton, Perth, Western Australia and offer - Financial Planning · Finance Broking · Property Management · Real Estate Sales · Property Investment · Development.

Disclaimer: Any advice contained in this article is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regard to those matters. Information in this edition is correct as of the date of publication and is subject to change.