What you should consider when choosing an investment property

If you are looking to purchase an investment property then it is likely that you are wondering if you should just purchase any property. When investing in property, it is important that you invest in the right property so that you can achieve the best possible return on your investment (through maximising capital growth). Considering appropriate factors is critically important when planning to purchase an investment property because maximising the capital growth on the property will enable you to build a substantial property portfolio. Before you purchase your investment property consider:

1.     SCARCITY. Scarcity essentially means that demand will always be greater than supply. When we assess the suitability of property for investment for clients we look for properties that have a uniqueness about them because this is what will provide the scarcity factor regardless of where the market is at. Whether it is the location, floorplan, walking distance to transport or the construction. Another factor to be considered is whether the property is easy to rent out.

2.     STRONG RENTAL DEMAND. Is the property you are looking at a property which has great appeal for potential tenants? Is it easy access to the local café’s, transport and are there quick and easy routes to the city nearby? Nearby must mean walking distance. It really pays at this point to understand your target demographic because this will enable you to search for key factors which are important to them.

3.     GROWTH. Capital growth is fundamental to any investment property purchase. A property may look good on paper but it may be a speculative purchase with no firm strategy behind it. If you buy well at the star you can achieve great equity without having to do any work to the property. It is important to be able to recognise what constitutes an A grade property (which will provide maximum possible growth) as opposed to an average property. A Grade property will always outperform the suburb medium price so this is the type of property you want to secure.

4.     BUY WELL. If you pay too much for a property you are likely to position yourself negatively in terms of equity which can have significant detrimental effects. You could be playing catch up for some time. If you buy the wrong type of property and it doesn’t increase enough in value then you could end up having to sell the property down the track with a return that is no where near what you could have achieved if you had have bought a better quality property.

As a property investor this is the last position you want to be in because you don’t want to have hundreds of thousands of dollars tied up in an investment which doesn’t provide you with a decent return. In comparison, if you secure the right property from the start then you will already be in front without even modifying the property. If it is an A grade property you have secured, you will also achieve very positive capital growth so over time the investment will provide you with an excellent return. 

Always do your research well, prepare thoroughly and buy with confidence – knowing that you are prepared and that the property you are purchasing is the right decision. Property is simple in theory but it is not so easy in practice. In fact, many property investors think that buying any property is ok when in fact, similar to investing in shares, making the correct purchase decision is critically important. 

If you are not sure what you are doing and want to arrange a time to have a chat further then you can organise it here. I would love to help you build wealth through investing in the right property.

Share this post