When buying an investment property there are going to be a number of different things to consider than when buying a home for yourself. Why are you buying this investment property? Are you are going to fix it up? Will you flip it? Or are you going to hold onto the property and rent it out.
When investing in a property, it’s necessary to acknowledge there’s a different set of criteria for choosing the type of property you’ll want. For strong capital growth you need to hunt down a property that will increase in value. This might take some time, but if you choose wisely it will be worth it:
Areas with high rental yields compared to the property price
These are typically properties closer to the CBD rather than on the outskirts of town.
Research recent sale prices for an idea of prices
This can be done simply by looking at the real estate portals under the Sold section. You can even filter your search by the features of the property and the suburb.
Is there a strong rental demand? Look for tight vacancy
Most tenants want to be close to lifestyle venues and locations like live theatre, bands, cafes, beaches, water ways or sporting arenas. Places they can walk to without the getting the car out.
Is the property close proximity to schools, shops, hospitals, public transport?
Parents and the elderly often have the need for medical centres and specialists. They may not drive and are looking for a home where a bus or train is nearby and where parents can walk the kids to school.
What will the maintenance costs be like?
How old is the property? Does the property you’re considering need exterior painting every ten years or so, or is it brick? Is it near the beach and salt air? Does it have a swimming pool? How big are the lawns? Is it two storey? is it in a strata complex where you’ll have levies to pay?
Are there any nearby developments or scheduled zoning changes?
New developments can be both a negative and a positive. What impact will they have? Casting shadows? Causing traffic congestion and lack of parking? Improving street appeal and values? Changing a zone can be very lucrative. Each council has a different set of zonings so to give you an example let’s use Newcastle City Council where most homes are zoned R2 which means Low Density Residential. If this was to change to R3, is Medium Density and it now means you could build townhouses on your parcel of land. R4 means you could build units up to 8 storeys high and a Mixed Zoning means you could have both residential and business! The more you can do with the block and the more you can get onto it will determine its value.
How many bedrooms, bathrooms and parking spots?
Just because it’s bigger does not mean its better! Four bedroom homes with 2 bathrooms and 2 lock up garages in Aberglasslyn or Chisholm may give you a weekly rent of around $520 and a two bedroom, 2 bathroom apartment in Wickham with one car space will likely give you back $685 per week but cost the same to buy.
For more information or to have a discussion about your needs, call Annette Pinkerton today.