What to Look For When Buying an Investment Property
Buying an investment property has a lot less emotion involved as compared to when you’re buying your own home. You’ll want an area where your investment property will produce sound yields and has potential for growth. A good quality investment property and a nice area to live in is also one of the factors you are considering. However, it’s not just your tastes and feelings because you will not be the one living there. So in future, these are the things you should keep in mind when purchasing an investment property:
Capital growth and rental income
This is the most important thing because the main reason you invest in anything is to make money. You need to know where you are buying, what is around and what are the future development. These factors will generally increase your value if you put them in mind when you’re choosing.
The other important factor is the rental income. An investment property that is consistent in renting can ensure you a steady cash flow. And if possible, you can also have the ability to increase your rental return.
Capital growth and rental income will depend on the following:
- Recent sales prices in the area
- Current rental prices in the area
- Interest in the area – current and predicted future interest. Do your research, and find out what areas do well in the rental market.
- The type of investment property
- The amenities of the building if it’s an apartment.
Even if you’re not the one living in the property, it will still be a home for someone so it should appeal to a broad range of possible tenants. It should have a good layout and configured correctly because if not, it will put tenants off. And most importantly materials are good quality.
You also want the property to appeal to a number of tenants. Remember, competition not only means you’ll have the pick of the bunch when it comes to choosing a tenant but it also potentially means higher rents.
Choosing a location that you’re not familiar or comfortable with is not recommended. You have to do your research if you’re purchasing out of your home city.
Once you’ve decided where you’ll be investing, there are still loads of elements to consider:
- Is it located at the corner of the street?
- Is it near CBD or business area?
- Is it close to schools and local shops?
- How close is it to public transports?
- What other amenities are close by?
You have to consider those because you have to think of your tenants convenience.
You have to remember that this is a long term investment. If you put yourself in a shoes of someone who is looking for a property to rent, what will make you decide to rent the property?
Make sure it appeals to the most amount of tenants; young couple, a small family, or retirees. Have something extra like a second bathroom or a lock up garage.
With any rental property, you want it to appeal to the most amount of tenants. Look for properties that offer that little something extra, like a second bathroom or a lock-up garage.