Characteristics of a Solid Investment Property
To maximise your rental income and increase capital growth, you need to make sure you are investing in a property suitable for the type of tenants you want. It’s important to consider the following property features when you purchase an investment property to rent out – for your tenant’s benefit as well as your own.
An investment property must be in the right location
Location location location. This is something about the property you cannot change with any amount of money, so it should be well considered before purchase.
You will probably invest in property to rent it out, so you need to think about what tenants you are trying to attract. Working professionals may want to be close to public transport and be in the vicinity of bars, coffee shops and restaurants. Families might have the local schools and parks on their mind. Investing in the right location can boost the price you can charge.
An investment property must be the right purchase price
Income from an investment property doesn’t just come from rent. Ultimately, if and when you’re looking to sell, your investment should have gained growth potential. To get a head start on your equity, you should ideally buy an investment property at below its asking price.
An investment property may be cheaper to buy when it has slight issues
To purchase the property at lower than the asking price, you could look for any small flaw that might bring the value price down. A minor flaw is not a renovation project and should be quickly fixable, as otherwise, you are losing money on any rent that may otherwise be coming in.
The best thing about choosing a property which has one or two slight issues is that you’ll have less competition. Investors especially don’t want a property where work is necessary, as they wish to receive an income immediately. Spending less on buying the property but a small amount of extra work could increase the property value overnight.
An investment property should be quick and easy to rent out once purchased
As much as the above statement is right, you should ensure that any small fixes can and will be fixed right away. You do not want to lose any time in putting the property on the rental market. Saying this, a lick of fresh paint if needed can boost the asking rental price and increase demand from prospective tenants.
An investment property must feature what tenants are looking for
First impressions count – what’s inside and outside of the property is the crux. If the outside of the property looks unkempt, potential tenants may be driven away. Elements to consider include:
- Good condition kitchen and bathroom/s
- Car parking space
- Ample storage
- Balcony / garden
- Security features
- Size of rooms
An investment property should be low maintenance in the long-term
While properties will always need updating now and then, mainly to keep them fresh for tenants, you want to be wary of a property that may require extensive work in the long run, or in a couple of years. Not only will this cost you money, but you may need a vacant property, which will stop your flow of income.
This comprehensive list of things to look out for when buying an investment property should help you make an educated and well-thought-out decision, and most importantly, one that brings you a steady income over many years. Once your investment property is set up and ready to make you an income, have a read of our tips to improve rental income – starting with the best advice will put you in good stead to create a successful investment!
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of selling your home and are ready to make the next move buying or investing, you can contact us for information about the best options for you when it comes to your mortgage.