Buying an investment property is a popular and relatively easy way to achieve good long term returns. But how do you go about selecting the right one? Here are some tips to kickstart your search.
1. Research the market
The market is constantly changing so it is important to do your homework before buying a property.
“Check out recent sales on homes.com.au to get an idea of local values,” said homes.com.au (title), (name).
Talk to agents and find out whether the suburb has a ‘good’ and ‘bad’ side. Consider proximity to infrastructure and the noise impact of things like railway lines snaking through the area.
2. Consider the type of property to buy
The old rule in real estate is that houses achieve greater capital growth and apartments achieve greater rental returns. This is no longer necessarily true in the bigger cities, where a strong move to apartment living has reduced the growth gap. In other words, either type of property is good.
For most people investing in real estate, the right type of property comes down to your buying budget. If you can afford a house, go for it. In the big cities, land is scarce and you get more terra firma for your investing dollars with a house.
If your budget only allows for an apartment, that’s fine, too. Just make sure you’re buying quality. Avoid cookie-cutter towers where every apartment is the same. Avoid main roads. Make sure the strata levies aren’t too high.
Check the aesthetics of the building exteriors. Does it have good street appeal? Do you notice any concrete cracking or other issues that might indicate the building is poorly managed?
What about the interiors? You can fix old stuff but a bad floor plan or a poor outlook can’t be changed. If the property is run down and you don’t mind renovating, this can be a fast way of improving capital value and rental returns in the one hit.
3. Get expert advice
Whether it be a buyers’ agent, accountant, solicitor, building inspector or mortgage broker, expert advice is essential. There are many decisions to make before buying an investment property and you need to do sufficient research to ensure you know where and what to buy.