Your checklist for buying a successful investment property

Substantial tax benefits, an accessible market, low interest rates and flexible lending options are just a few of the reasons why investing in property is such a fantastic strategy for building wealth at the moment, however before you start making offers it’s important to consider reviewing our property checklist. By asking yourself all of these questions before placing a bid, you could save yourself from significant drama further down the track.

Does The Suburb And Property Suit Your Investment Strategy?

Part of finding a sound investment property will require you to research sales information, growth charts and any rental data pertaining to the area that you’d like to buy into.

By observing whether or not there’s been a steady increase in prices or if the rental market has produced consistently high yields over the last 10 years, you can get a better idea of the suburbs prospective worth. Avoid any localities where prices or vacancy rates are erratic, and bear in mind that steady growth indicates relative long-term stability.

If you’re only new to the property investment game then it’s probably also ideal if you only look at areas that you can reach by car. There’s no point buying in Perth if you’re from Sydney and don’t have the resources to view the property at least 4 times per year.

Once you’ve found an appropriate location, next on your property checklist is to ruminate on whether you’re looking to invest for capital growth purposes or do you intend to rent the property for a steady return. This is part of having an investment plan, which should be adhered to when scanning the real estate market. It’s a waste of time to prospect in suburbs with high rental returns but low capital growth if you are looking to buy then sell for a profit in the near future.

Conversely you’d be throwing money away spending a motza for a prestige property in an affluent suburb if it only has to house tenants. By formulating a decisive long-term or short-term investment strategy you can further narrow down your search for a suitable property.

Your property checklist: is The Property Located Near Amenities And Transport Options?

Once you think you’ve whittled down potential investments, the next step of your property checklist is then to put all the properties under the microscope for further analysis. Of course this also hinges on whether you’re looking for capital growth or to simply rent the property. Essentially though you’ll need to ask yourself the following questions no matter what your intentions are:

  • Is there a shopping centre or at the very least a convenience store nearby?
  • Are there parks on green spaces in the area?
  • How available is public transport?
  • What is the reputation of the suburb?
  • Are there any future developments that may negatively/positively impact the property’s value or rental appeal?

Transportation is a major aspect to contemplate. By finding out if the area has access to road networks, freeways, cycle paths, train lines and bus stops, you can get a better idea of its worth. Just remember; if you plan to rent the property in the short term, you’ll still need to make sure the suburb is showing at least some signs of capital growth – chances are you’ll have to sell one day right?

Are There Plans For Future Development In The Area And How Will They Affect Prices?

Areas that have been earmarked for future residential, commercial or industrial development can have profound impacts on the value of your property and it’s chance of being tenanted.

Not only can nearby construction carried out over months or even years put off renters and buyers; if the infrastructure being built is unsightly in any way you can pretty much kiss a premium price or steady rental income goodbye. A drive around the neighbouring streets will give you an idea of any work currently happening, but you should also check with council as to whether there are any approvals in place or development applications in the pipeline.

How Much Work Does The Property Require, If Any?

Another important facet of buying a successful investment property, and which should be on your property checklist, is to ask yourself “how much work does the property require, if any at all?” Buying a property that you believe is a “renovators dream” could very well turn into a “renovators nightmare” very quickly if you’re unprepared.

Employing a building and pest inspector to go over the property with a fine tooth comb is one ways to study the quality of the structure. If you’re purchasing with the intent to rent the property out, you may be willing to overlook a few minor cosmetic inconveniences as long as 99% of the home or apartment is safe. One thing that should never be glanced over however is asbestos. Unattractive to tenants and buyers; expensive to remove; and of course highly dangerous when exposed; asbestos is guaranteed to turn away the majority of prospective renters or purchasers.

On the plus side though, termite damage, small amounts of asbestos or an overall rundown appearance can always be used as a bargaining chip to knock the price down further.

Have You Talked To Trusted Local Agents And Asked Their Opinion?

Everyone tends to know at least one real estate agent, and it’s possible that you know somebody that’s friendly within an agent in the area you’re looking to buy in. With this in mind, it never hurts to make a few phone calls to trusted local agents to gauge their opinion of the market and pick their brain about the best streets, future developments etc. Go about it as if you’re vetting the suburb and make sure to get different viewpoints from a number of leading agents.


Resources:

  1. Terri Scheer, “Property Investor Checklist”, https://www.domain.com.au/advice/property-investor-checklist/
  2. Investorassist.com, “My Property Investment Checklist”, http://www.investorassist.com.au/blogs/my-property-investment-checklist
  3. James Hurwood, 20th September 2016, “Checklist Buying A House”, https://www.canstar.com.au/home-loans/checklist-buying-a-house/
  4. Margaret Heidenry, 20th April 2016, “Buying A Home Checklist”, http://www.realtor.com/advice/buy/buying-a-home-checklist/

 

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