6 Factors To Consider Before Investing In Property

The number of people investing in real estate is increasing, but before you buy, you need to make sure it is right for you before you make a decision.

Here are 6 factors it is wise to consider before making your property purchase:

1. Your Investment Focus

With real estate you have 4 choices: Commercial, Industrial, Retail and Residential. Commercial and Industrial offer a far higher return to compensate for what is frequently a lower capital gain as well as a higher risk of vacancy or non-payment of rent during the more difficult periods of the overall economic cycle. Residential real estate is the safest investment and consequently has a lower return.

2. Property Type

This relates to options such as a Strata home unit, a Townhouse or a house on a Torrens Title block of land. Each has its advantages, as well as disadvantages. In our experience the majority of investors choose Strata home units or townhouses. These have had an excellent return as more and more people are preferring a lifestyle without the maintenance of a block of land. On the other hand, those who choose a house generally look at the long-term prospects of the capital gain of the property or the potential of increasing the return by building a garden ‘granny’ flat.

3. Location, Location, Location!

You hear this all of the time… that’s because it is so important. Is the neighbourhood safe and secure? Is there easy access to public transport and shops? Is it near schools or a university? Location has an impact on your ability to attract high returns. If you buy your investment in a location considered to be of a low-socioeconomic standard, even though your return will be much higher, you may find a much higher risk when it comes to the quality of tenant.

4. Condition Of The Property

A good tenant will be attracted to a property surrounded by nice houses with good, quiet neighbours. When it comes to the layout of the home itself, entertaining areas such as an outdoor BBQ in a private covered patio or a balcony are always attractive as is a modern kitchen, bathroom and open house floor plan. If you decide to buy a rundown property (“Renovator’s Dream”!) make sure you are aware of what can you do to renovate it, to improve its attractiveness to a good tenant.

5. See The Property Through The Tenant’s Eyes

When investing in residential property, it is important to look at it through the eyes of your future tenant. Never forget that your investment property is your tenant’s home and attracting a house-proud tenant will always pay good dividends.

6. The Right Tenant For You

A good tenant is much more than someone who pays their rent on time. At John Pye Real Estate we not only consider the rental history of a tenant but also their character and their values. We believe it is very important that your values, and ours, are compatible with the people who will call your property their home. Characteristics such as honesty, trust, loyalty and respect. “Like attracts like” and so we attract tenants of good character. And, a tenant of good character means a problem-free tenancy.

 

The current market outlook is positive for property investors with the all-time low interest rates, a very low vacancy rate and an abundance of excellent quality tenants. We would love to help you if you are considering buying your first investment property, or second, third or even fourth. Feel free to call Bec or John on 9980 6777 or email bec@johnpye.com.au. We can also discuss our Property Management service and how we can ensure your investment return is maximised.

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