Five things to consider when choosing an investment property

The suburb and style of property in which you chose to invest will determine the type of tenant you attract, the rent you can charge and the long-term capital growth you could achieve.

Research your target area thoroughly to understand local rental demand and whether houses or units are more popular with renters. Typically, houses are more expensive but will provide better capital growth because of the land component, especially in family-friendly suburbs. Units are usually more affordable and easier to maintain, making them attractive to singles, couples and downsizers who usually prioritise their lifestyle and convenience.

To help you make the right decision for your investment, here are five things to consider before buying an investment property:

1. Prioritise a prime location

   City centres, popular streets, local schools and universities or near hospitals are always popular and command strong rental rates. Investing in high demand areas means it’s usually easier and quicker to find replacement tenants and keep your cash flow steady.

2. Check local amenities

   Tenants want convenience. Suburbs with easy access to public transport, schools, , shopping precincts and employment hubs, will always attract wider interest. Properties on noisy streets, below flight paths or cut off from public transport, will struggle to find quality tenants which could adversely affect rent levels.

3. Choose between a house and a unit

   Deciding whether to invest in a house or a unit depends on your budget and investment goals, and capital growth varies depending on what you buy. Focus on rental yields, running costs and growth potential.

   - Houses typically deliver high capital growth because they have land, however are usually more expensive

   - Units generally offer a more affordable option and may be easier to maintain, but you should factor in strata fees into your holding costs

4. Listen to the rental market

   Successful investing is about giving the local market what it wants. Research the demographic of the suburb before deciding what type of dwelling to buy. Match the property type to the dominant demographic living in that area to secure consistent tenancy.

5. Avoid major fixer-uppers

   Unless you’re in the construction industry and secure a property well below market value, avoid buying properties that require structural repairs and high cost overhauls. Large scale renovations will drain your budget quickly and keep the property vacant for months without earning rent. Instead focus on a property that may only need minor cosmetic updates. A fresh coat of paint, updated kitchen benchtops or modern light fittings can lift your weekly rental return without the risk of costly building surprises.

– Provided by RealEstate Content by ActivePipe