While it may seem as though some people have all the luck when investing in real estate –they either find the perfect property that gives them high rental returns or they profit from amazing capital growth – it is very rarely luck that makes them successful. Generally you’ll find that it is a combination of thorough research and getting help and support from the right people at the right time. Really successful property investors also usually have a “playbook” of rules or guidelines that help them choose property they wish to buy. In this article we look at four of the most popular tips used to choose the best investment properties.
When you’re considering purchasing a residential property investment one of the choices you’ll have to make is whether you look in country or city locations. Properties in country locations (and especially apartments) and those in semi-rural locations outside the major capital cities will generally be a cheaper option, and it is tempting to want to “bag a bargain” if you’re a first time investor or looking to expand your portfolio. Property experts warn that in the rush to buying a cheap apartment or house in the country you risk overlooking the fact that your long-term capital growth will be much lower than if you purchased it in the city. Having an investment property in the country can also pose other, more short-term issues such as lack of suitable tenants and low rental returns because of a lack of amenities such as shopping and transport links.
According to investment specialists, investing in either an existing dwelling or an off the plan development in the major capital cities such as Sydney, Adelaide, Perth, Melbourne and Brisbane is a more successful strategy for building wealth and attracting good tenants. Australia’s cities are experiencing high population growth, with good rental demand and record capital increases for property over the long-term.
Brand New Developments
When you’re looking at investment properties for sale, don’t forget to check out the latest off the plan property offers and upcoming residential developments. This is because buying off the plan can give you the successful property portfolio you’ve always wanted, without many of the hassles and problems associated with existing property.
Buying off the plan means just that: you’ll be purchasing a property before it has been built and based on the plans supplied by the builder and the developer (although often you will be able to take a virtual or real tour through a display property as well). This gives the investor many advantages including:
- Only having to hand over a small deposit initially (usually 10%), giving you time to work on your finances before the development is built and your purchase is settled (normally around 2 years although terms can vary depending on the contract)
- Potentially profiting from capital growth in a rising market while the property is being built
- Attracting high rental income from the finished development
- Having lower repair bills and ongoing maintenance fees
If you are looking into off the plan properties for investment purposes make sure you do your homework and choose developers and builders with sound track records and successful developments. It is also a good idea to contact an experienced residential property investment company such as Ironfish to discuss your requirements and get their assistance in choosing the right property for you.
Buying Properties With Facilities
This applies to existing apartments and townhouse complexes or off the plan property developments. Most brand new developments and off the plan properties today feature a range of different facilities and resident amenities such as swimming pools and spas and roof gardens and bbq areas. From an investment perspective these can add considerable value to a property, making it a more attractive option when selling or for tenants wanting to move in. Prestigious developments will also attract higher rents, offsetting the annual cost of ongoing maintenance and any repair costs.
Up And Coming Suburbs
One of the keys to capital growth is maintaining a long-term strategy – at least 10 years – for your investment property. Another is choosing property in up and coming suburbs in the inner cities where you are more likely to experience an increase in prices over the years. While it can seem challenging, choosing which suburbs are likely to grow in the future does not take a crystal ball or a degree in economics; instead, a little research and help from local property investment experts can help you pick an area that will deliver both great capital growth and ongoing high rental returns. One way to conduct your own research is to find out which suburbs are currently undergoing a transformation with new shopping centres, transport links, businesses and schools. This provides a good indication that the area is growing rapidly and will be well serviced by good amenities in the future. The best residential property investment companies have their own teams of local specialists who monitor the area and can provide helpful information on potential growth and suitable property opportunities.