When choosing an investment property it is not about finding a place that has “the vibe” for you, it is a financial decision based on a number of key criteria.
The most important thing with any investment property is ensuring that it is tenant friendly as this will help you maximise the rental return on the property. This means it needs to be close to schools, public transport and an easy distance to main areas of employment. Try to choose a property that suits the demographic of the area, so think about whether potential tenants will be students, families or single professionals.
Choosing the type of property
There is a lot to consider when choosing the type of property. Apartments can offer opportunities to offset your investment through negative gearing but you have to take the body corporate into account as dealing with them could be a burden.
New properties offer great depreciation allowances, but an older property may provide a higher ongoing income. To get a sense of the ongoing income do a search on rental prices in the areas you are considering.
As well as urban houses or units investors might consider holiday apartments or rural properties.
Choosing the area
If investing in more than one property it is highly advisable to buy across different states or regions. This can spread the risk of your chosen area not performing as well as you hoped.
If you are only investing in one property and for the first time then go with what you know. Choose an area that you are familiar with, preferably one that you have lived in so that you know the desirable spots and the available amenities.
If you are looking to invest in an area you are not familiar with then you will need to do some research into things like population growth and nearby industry. Equally important to consider are age of population, average wealth of population, new housing going in the area and employment levels.
Choosing your property
Once you have done all of your research you can start the fun part, looking for the right property.
Start with an online search of properties in your chosen area and in your price range. Consider registering with several estate agents. You may also want to attend some auctions in the areas to get a sense of the market.
If you have done all of your calculations are confident that you the investment will perform and that you can cover all ongoing costs then start bidding and buying! And remember if you are unsure at any point of the process, get advice from a qualified financial professional.