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At Premier Buyers, our philosophy revolves around 3 pillars of portfolio growth – Cashflow, Capital Growth and Rental Growth. The importance of each variable will vary slightly depending on individual circumstances and where you are with the property journey. You need a trifecta to build a successful portfolio, and this may explain why only 1.5% of Australians own three or more investment properties. Here are some tips for finding the right investment property.

Know your numbers.

Investment is a numbers game and investing in property is no exception. You need to understand how much you can afford or are willing to contribute to the property monthly, quarterly, and annually. Buying a property is a long-term investment and you need to be able to go to bed comfortably at night.

Rental Yield is the metric that will predominantly give you an idea of numbers. You also need to take into consideration other upfront and ongoing costs like government charges, LMI, property management fees, insurance, strata, council rates, loan repayment etc. Whilst the property itself determines cashflow, the area also plays a huge role in what you may expect in cashflow.

Location, location, location.

There are a number of factors to help determine the right area to invest in. They include understanding the equilibrium of demand and supply, historical price movements, renter’s proportion etc. Click the link here for top tips for choosing the right suburb to invest in.

Property type

The history and facts suggest that the freestanding home on a decent block of land generally outperforms other dwelling types including townhouses or apartment/unit. When the gap is too big between a standalone home and townhouse median prices, the latter's price tends to increase faster.

The property type generally determines the upfront and ongoing costs. Townhouses and apartments generally come coupled with strata fees. However, these fees make a rare appearance in freestanding houses.

Know your potential tenants.

You need to understand what most tenants want in the area. A 2-bedroom unit may not be the most popular rental listing in a family-friendly area popular for a high school. The information about popular property configurations to lease is easily discovered online.

Other features like a large shed, air conditioner, secured car space etc. may appeal depending on the demographic composition in the area.

Consider future buyers.

Buying a dual occupancy house with ‘creative’ plans may make complete mathematical sense to buy and take advantage of a higher-than-average rental return. When you are ready to sell, you may be deterring a big proportion of future emotional buyers of the property. Remember only 31% of Australian properties are owned by investors and you wouldn’t want to rule out the remaining 69% of buyers who are more likely to pay premium.

Look for functionality, not luxury.

The size of living areas, storage space, bedroom size, natural light and outdoor entertainment are generally important for most buyers and future tenants. An open home can hide some imperfections with every light fitting switched on, or an exceptionally staged property with a tiny dining table, uncomfortably small couch or a single bed. These elements often create an optical illusion of the space being larger than what they are.

At the same time, look beyond the optics of a pull-out mixer kitchen tap or a nice-looking Japanese Buxus hedge at the front. You need to remind yourself that the tenant is going to live in it, not you.

Embrace cosmetic imperfections.

Did you notice that ding on the wall, tired-looking carpet, and a dodgy paint job just turned away a young couple who was going to go on a bidding war? Whilst these cosmetic imperfections may be an eyesore, it may cost you less to get them fixed instead of buying a ‘perfect’ place with a fresh paint smell and soft carpet under your feet.

These cosmetic imperfections may give you an immediate return on the property price or potential rental income once you have the keys. However, issues behind the wall should not be ignored. It’s always recommended to hire competent professionals including building and pest inspectors. Your solicitor would also be able to provide appropriate guidance to negotiate for these surprises that are non-structural in nature after the contract is exchanged in some states and territories.

Get help from the right professionals.

Having the right team of professionals is critical for success. Most savvy property investors use a range of professional services including buyer’s agents, mortgage brokers, accountants, solicitors, property managers, building and pest inspectors etc.

At Premier Buyers, we step you through your property journey and connect you with the right professionals to allow you to make an informed decision.

We’re here to help

Interested? Let us help you find the right investment property. Book an obligation-free consultation today.

Click here for a helpful guide if you are looking to buy a property via SMSF.

The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any individual objectives, financial situation or needs. Before acting on this information, Premier Buyers recommends that you consider whether it is appropriate for your circumstances and engage qualified professionals.