03 Aug 2016
How to Choose the Right Investment Property
Many financial advisors recommend property be part of a complete asset portfolio, and with good reason. Property is an appreciating asset, and the demand for it won’t disappear any time soon.
But what makes a good investment property? What kind of mortgage should you get? How can you wipe the fog from your ROI crystal ball and ensure that your investment property will be a money-maker for years to come?
We’ve been helping property investors make a start, maximise their ROI and navigate complex financial conditions for years. If you’re looking to make a start and buy an investment property, here’s what you should know:
Trends
Nobody can predict the future. But through thorough analysis of trends and past performance, it’s possible to predict the rate at which an area will grow in population (and general lucrativity).
Before investing in your investment property, get a good sense of what’s on the cards for the surrounding area. What new developments are under way? Is the population on the incline? Will there be increased opportunity for employment nearby?
To get the best answers, it pays to speak to a property manager. Free comparison sites such as LocalAgentFinder can see you speaking to a top performing local property manager within days.
Value
This is the most important factor when you’re looking to invest in property. After all, the chief goal of investing is to make as high a return on that investment as possible. Your property should yield (or have the potential to yield) a big return.
Try to find properties that will double in value every 7 to 10 years. As long as the demand is exceeding the supply in its respective area, a property has the potential to increase in value at a consistent and predictable rate.
Again, you may need to enlist the help of a professional. Property managers are still likely your best bet with getting good information, but make sure to see more than one.
It might also pay to speak to an accountant. After all, you’ll need to factor the revenue you’ll wind up making from tenants against the regular maintenance costs of the property itself. Depending on the quality of the building, these can vary greatly. An accountant should also be able to factor in capital gains tax and other potential costs.
Location
It’s important to get to know the location you’re looking into, but not only by the numbers. Cultural opinion matters tremendously. For example, a low crime area could still be hard to find tenants for if that area has a reputation for crime. Don’t invest in suburbs you don’t know well yourself.
Having said that, you need to know the numbers too. Go to the public library or local police station for accurate crime statistics. Vandalism rates, petty crimes and trend directions are all vital to understand before investing in property.
It’s also important to consider what kind of tenants you expect to end up renting to. If your property is near a university for instance, you might have to deal with more vacancy than you would otherwise.
Mortgage House
At Mortgage House, we understand that making a start in property investment can be a little tricky. But don’t worry, we can help with that.
If you’re thinking of investing in property, check out our investment property loans today – specifically designed with investors in mind.
You shouldn’t have to change your plans to match your home loan, so we keep our home loans flexible enough to match your plans. Whatever your goals or financial situation, we’ve seen it before and we know how to help.
The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.