When it comes to choosing an investment property, you could easily spend hundreds of hours researching suburbs, visiting home opens, and agonising over whether you’re making the right decision about where to buy.
Buying for investment is very different from buying a family home to live in, and it can be tough to know where to start. But I firmly believe investing in real estate shouldn’t be rocket science, so I wanted to share my 3 top tips for choosing the right investment property – tips that I have always relied on when investing myself, and that I consider when recommending property for clients.
Location is key – look for a growing area
You’ve heard it before, I’m sure – location, location, location. But when it comes to investing in property, location really is key.
You want to invest in an area that has a growing population; for this reason, I have invested in, and often recommended, property in capital cities around Australia. Capital cities are usually a ‘safer’ bet for your investment and you can’t go wrong when picking a busy urban centre in Australia.
More specifically, when looking within capital cities, you want to pick an area with good infrastructure. Keep an eye out for places where the government is spending money on upgrading roads, putting in train lines, or spending on schools.
Take a good look at what amenities are available nearby. At a minimum, you want a retail centre with a grocery store nearby, while other amenities such as schools (public and private, primary and high school), universities, and medical centres are a big plus.
These are the things tenants will look for and they will choose a rental property in a good area whenever possible.
If you find you can’t secure an investment property in this kind of area, the current market means you will still be able to get tenants and they will still pay you rent – however, they may not pay as much rent, or stay in the house for as long, as they are likely to want to move to a better area when they can.
To put it simply, securing a property in a growing area, with good amenities, will give you a much higher chance of securing a long-term tenant.
Quality matters – buy the best you can afford
Whether you’re looking for your first or third investment property, you’ll have a budget in mind – and this will be different for everybody. But whatever amount you’re looking to spend; my advice is to focus on quality. Do not buy the cheapest house on the street!
Let me explain. You want to buy a house that reflects the quality of the area you’ve chosen. Some people will look at buying the ‘worst house on the street’ in order to secure a place in a good area, but I don’t recommend it. Because while you may save money on buying that property in the immediate term, you will most likely find it hard to attract long-term tenants, which is what you want for the long term.
Often the tenants who move into poorer quality homes are doing it as a stop-gap until they can find, or afford, something better. If your house is not good quality, your tenants will always be comparing and looking for something better, whether it be that they want something newer that doesn’t require as much maintenance, or just better fixtures and fittings.
My advice is not to buy the absolute cheapest property you can find when building, or buying, an investment property. You want a house that fits well with the area, that’s as good (if not better!) as the other houses in the street.
Focus on appeal – what do your tenants want?
You’ve already thought about what potential tenants want in terms of location, now it’s time to look at the specifics of your house to make sure it will appeal to long-term tenants.
After many years of working with clients, builders, and property managers, I know what features are key to attracting long-term tenants: a well-laid-out four-bedroom, two bathroom property, with two living areas, a double garage, and some outdoor living space, ideally an alfresco area.
It sounds simple, but these features appeal to the largest group of potential tenants and work for most families.
Another way of thinking about this is to consider the things you want to avoid – such as “quirky” features that may have worked for the original owner but won’t suit typical renters. While they won’t be impossible to lease, if you can, avoid properties that have less than four bedrooms, have an odd layout with spaces that aren’t user-friendly, have renovations that were poorly executed, or a floorplan that doesn’t flow well.
Always think about what will be attractive to long-term tenants; if you start compromising on any of these things you might find your tenants don’t stay as long as they would in another property.
Reach out for more advice
If you’re thinking about buying an investment property, let’s talk. With more than 15 years of experience and over 2000 properties sourced, I can walk with you through every step of the process, from financing to finding the perfect property.
