Six signs of a great investment property
Purchasing any property is a major financial commitment and that’s particularly the case if the property you’re buying is for investment purposes.
Ideally, that property will serve you in both the short and long term, giving you an ongoing financial return in the form of rental income, while also increasing your overall wealth through capital growth.
So how do you determine whether a specific property fits that brief? Here are six signs of a great investment property.
Low vacancy rate
Investment properties can’t be viewed in isolation. They need to be seen within the context of the local market.
That means researching areas where demand for properties is high and available stock is low. The metric most often used to determine this is the vacancy rate.
In a balanced market, the vacancy rate sits around 3 per cent. If it’s higher than that it means supply outstrips demand, and if it’s lower than that it means rental properties in that area are in short supply.
When looking at any potential investment property, research the vacancy rate of that suburb, seeking out an area where the vacancy rate is at 3 per cent or lower.
Ultimately a low vacancy rate means your property will:
- Experience less rental occupier turnover
- Command a consistent rental price
- Sit vacant for less time between rental agreements
High rental yield
Rental yield is the difference between the income you receive from the property and the costs you incur owning it.
It’s often expressed as a percentage with a higher number indicating a better return on your investment.
When considering potential investment properties, research the typical rental yield for that suburb and also do your own sums, weighing up the rent that property would command versus your outlays, including mortgage payments, council rates, maintenance etc.
Services and amenities
Most rental occupiers aren’t just seeking a home, they’re looking for a community and area that suits their needs.
And often these needs are similar, including access to:
- Local shops
- Sporting facilities
- Medical services
- Public transport
- Schools
If an investment property ticks the box of having access to great services and amenities, it’s likely to attract a wider array of potential renters.
Capital growth potential
Investment properties tend to serve two purposes:
- Consistent rental income in the immediate term
- Capital growth in the long term
When considering investment properties, try to weigh up the capital growth potential, looking at:
- Employment stability in the area
- Council or government plans for that suburb
- Future infrastructure
- Proximity to major cities or lifestyle locations
- The recent growth of neighbouring suburbs
Low maintenance
Every investment property requires routine repairs and maintenance from time to time, but some properties require less maintenance than others.
When looking at potential investment properties, consider the property age, size, style, and location.
As you inspect that property, ask yourself: ‘What’s likely to need replacing at this property in the coming years, and what will need ongoing maintenance?’
Low crime rate
Every rental occupier wants to feel safe where they live, so factor this in as you look at investment properties to purchase.
What does the area or suburb feel like? How safe is it? What does a little research tell you about the crime rate?
How we can help
Our experienced property managers pride themselves on establishing great relationships with both rental occupiers and owners.
We manage every property as if it were our own and you can learn more about our property management services here.
Alternatively, if you are looking to rent a property, you can view the properties we currently have available here.
