Finding the ideal investment property isn’t easy.
In fact, it can be damn bloody stressful.
But don’t let that deter you.
They can also be highly rewarding and extremely lucrative.
That’s if you know what to look out for that is.
That’s why we have compiled a list of some of the most important features to consider on your journey to your next investment property.
A Great Location
Location is key to attracting the type of tenants you want to occupy your investment property. More affluent or desirable suburbs tend to attract more high-quality tenants and a larger pool of tenant applications. While a lower socio-economic location with less demand invites the risk of undesirable tenants and increased vacancy rates.
Wherever you’re looking to buy, be sure to do your research. If you can’t provide your tenants with the amenities they require, then you can’t charge as high as other investors that can.
Things to keep in mind include:
- Proximity to quality schools and universities
- Access to public transport
- Shopping facilities
- Distance from CBD
- Local crime rate
- Commercial businesses in the area
- Health facilities
- Restaurants and cafes
Low Vacancy rates
Finding a property in an area that has low vacancy rates could make or break your investment. To earn steady money, you need reliable tenants paying rent. If your investment property is vacant, then it’s highly likely you will have to dive into your own pockets to cover the bills.
Vacancy rates are generally closely related to the common model of supply and demand. Areas with less supply but higher demand are likely to provide investors with less risk of prolonged vacancy periods. While housing located in areas with less demand or oversupply may be harder and take longer to source reliable tenants. Even then if you do find reliable tenants, they may be inclined to find a ‘better’ offer in an area that is likely to satisfy more of their needs.
There are a lot of additional costs involved when buying an investment property. From mortgage repayments, council rates, insurance, legal fees, stamp duty – the just list goes on. But it’s also important to consider operational costs and the cost involved with maintaining the property itself.
Fancy appliances, smart home systems, garden upkeep, pool running costs, and more are just some of the things that can ramp up the price tag and cut into your yield. It’s your responsibility to take care of damages, maintenance, and repair works, so it’s best just to stick to the basics.
School Catchment Zones
A great way to attract high-quality tenants and maximise rental yield is by investing in an area that falls into the catchment zones of popular local schools and/or other educational institutions. School catchment restrictions mean that families are required in most cases to live within a specific ‘zone’ to be eligible for their kids to attend that school. Demand is generally high in these areas as supply is low allowing you to charge a higher rate with lower vacancy periods.
Do your research on the local crime rate in the area you are looking to invest in. The local police station is a great place to start for accurate crime statistics on the local neighbourhood. High crime rates often lead to higher vacancy periods and lower rent. The risk of break-ins and vandalism could also increase costing you significant money for repairs and large chunks of time out of your day.
Access to Public Transport
As the population increases in high-density areas, so does congestion. Not everyone can afford to live in the CBD or the residing areas. Nor do they have the time to be stuck in heavy traffic for long periods just to get to work or the kids to school. Therefore, suburbs with solid public transport links connected to high-demand areas tend to be highly sought after and increase rental yield potential.
Rezoning opportunities could provide you with a very lucrative investment package allowing you to potentially split a block of land from a single dwelling into say a duplex or triplex. The government and local councils are typically in charge of zoning restrictions, so it is a great idea to attend local council meetings or speak to those responsible to see if rezoning options are on the agenda. Rezoning tends to occur in areas with higher density to increase the supply of housing in high-demand areas. It’s advised to tread carefully though as there is no certainty these zoning changes will take effect.
In the Know
So, there you have it, our top 7 features to consider when looking for your next investment property.
As you can see, there are a lot of factors involved and considerations to weigh up. But as long as you spend the time carrying out the research and performing the proper due diligence then the risk of investing in a financial failure drops dramatically.However, if you find you are struggling to find time or need a hand looking for your next investment opportunity, give a highly experienced real estate agent perth at Semple Property Group a call at (08) 9494 2606.