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What makes a great investment property?

With rental vacancy rates at a low, investors are beginning to re-enter the market, seeking out properties that will offer a good return and the possibility of capital growth in the years to come.

But what makes a good investment property? 

Here we discuss five key areas that often indicate a property is a good investment.

Easy to rent

One of the two main aims of an investment property is to deliver an ongoing return in the form of weekly rent.

That means the first thing to look for is a property that is easy to rent.  

To determine this, it pays to research the vacancy rate in the area where you intend to purchase, along with the median rent price that properties in that area command.

But it’s not just a matter of finding a current low vacancy rate, it’s also about looking at whether that vacancy rate is relatively stable and whether rent prices have also enjoyed a general trend of ongoing growth.

This tells you whether there is consistent demand for properties in a specific area.

What type of renter?

As you commence the search for an investment property, consider the type of renter that the property would appeal to.

Is it students, families, professional couples, sea changers or perhaps a mix?

When you consider the most likely type of renter in a specific area, it helps narrow down what type of property to look for.

For example, in an area where families predominantly reside, you might be looking for a house with off-street parking, an extra bathroom and backyard in a suburban setting.

If it’s professional couples, perhaps it’s a two-bedroom unit with good on-site amenities, lock-up parking, and proximity to a CBD.

Capital growth

The second big thing to look for in any investment is potential for long-term capital growth.

Determining this involves drilling down into what that suburb has historically seen in terms of property value increases, and also what it could potentially do in the future.

Areas which tend to enjoy long-term capital growth have features such as:

  • Stable employment and a range of industries
  • Planned further infrastructure
  • A range of amenities (or planned amenities) such as schools, healthcare, public transport and recreational facilities
  • Proximity to a drawcard such as a beach, major urban hub, capital city, etc

Each of these factors might indicate the suburb is primed for expansion or will attract increased interest in years to come.

Stable industries

Selecting a suburb or region with a variety of stable employment industries is important for both potential capital growth and the ongoing income of rent.

It helps protect the property from fluctuating employment trends which could see supply and demand for rental properties shift.

In other words, the suburb or region should have more than one industry to support the employment of its residents.

For example, if the intended location’s predominant employer is tourism, a downturn in that sector could see demand for rental properties fall.

Available amenities

While selecting the right type of property is important, it’s also critical to consider the amenities within that suburb as well.

Does it have the right infrastructure available for the community, such as public transport, education facilities, healthcare, recreational areas, and more?

This makes the property more appealing to a range of renters and also helps ensure long-term capital growth.

Easy to maintain

Finally, a rental property should be relatively easy to maintain. That doesn’t mean the property needs to be new, but ideally will be in a good condition that attracts prospective renters and requires minimal maintenance and repairs.

This helps protect the rental owners’ bottom line, ensuring the property is easy to rent, maintains its value and requires minimal outlay each year.

Regardless of the age of the property, all investments will need maintenance and repairs from time to time, but if you start with a solid property, that outlay will likely be minimal and will result in fewer interruptions to the renter’s lives.

Looking to buy or sell?

If you’re considering buying or selling a property, why not chat with one of our friendly agents on 1300 438 439 to understand the state of play in your local market?

We’re not just about property, but the people and the stories behind it. You can also view our list of currently available properties here.