While the seemingly endless amount of television reno shows makes property investment seem easy, there is a lot more to real estate than rookie investors may think.
It’s not simply a matter of checking out a few properties and buying the one that ‘feels right’. It’s a process that requires research.
For all investors, one of the first things to consider is location. Getting the location right can result in higher rental yields, lower vacancy rates and the opportunity for capital growth over the long term.
But how do investors choose the the best location to invest? In this post, we’ll discuss some key things that potential property investors should consider when trying to choose the best location to invest.
#1: Know what tenants want
Before buying in a specific location, check out the demographic it currently appeals to.
Find out who is actively renting in the area, and use that as a reference when searching for a property. Understanding what the target tenant wants from a property can also help in the hunt for the right investment, for example a big backyard, an extra bedroom, or off-street parking.
#2: Look for growth areas
Another factor to keep in mind is growth.
Be on the lookout for areas with a growing population, rising economy and increasing local infrastructure. It’s also worthwhile checking for any nearby commercial developments in the works, such as shopping hubs.
#3: Choose a low maintenance property
Aside from appealing to potential tenants, a property has to be liveable.
Choosing an investment that doesn’t need much work initially, and won’t need much maintenance or day-to-day repairs , can help to keep costs low over time.
#4: Forget emotion when buying
When choosing an investment property, it’s wise to buy with your head, not your heart.
It can be all too easy to get swept up in a property or a location, to then ignore important factors that may affect the bottom line. As an investor, it’s worth remembering that you are not buying a property that you want to live in – you are buying a property that you want to make money from.
#5: Understand rental returns
While negative gearing can provide tax benefits, the goal should be to find a property that is positively geared. That means looking closely at the expected rental return for the property type and location in question, to then choose an investment that will provide rent that covers all expenses for that property. Look at vacancy rates to find a tight rental market, and check out the expected rental yield.
#6: Invest where you know
Last, but possibly the most important, invest where you know.
This doesn’t mean investing in property down the street from where you live. It means understanding your potential investment location by doing some in-depth research. Check out everything from vacancy rates and demographics to council spending and capital growth rates. This could help make your investment decision that much easier.
At the end of the day…
There’s no denying investing in property is a big deal. But, it can be made all the easier by doing your ground work. If you want more real advice on property investment, chat to us at Adpen!
