Whether you’re an experienced property investor or just starting out, it’s crucial to do your homework, and have a checklist to refer to when making a final decision on buying a property – or to help you to choose between investment properties.
Here are five key factors to consider when buying an investment property.
As land is the key driver of capital growth, make sure you assess the land versus building ratio. If capital growth is the key focus of your investment strategy, aim to find properties where the land accounts for at least 70% of the total value and the building a maximum 30% of the value.
- Location, location, location…
Consider the attractiveness of the location to potential tenants. Most people want properties close to transport, schools, shops and lifestyle facilities. And particularly in Perth, many want to be near the ocean or river. Assess rental rates of comparable properties to ensure you’ll be able to afford the holding cost. Also consider if there are any reasons for likely growth of rental prices in the area, and for your particular property.
- Not all streets are equal
Look at the location of the property within the suburb. Is it in a superior or inferior location or street? This can affect rental rates and resale.
Think about the expected maintenance costs of the property. Anticipating if they are likely to be high or low can impact your final decision.
- Historical growth
Consider both the long- and short-term historical performance of the suburb. If it has started to do well, get to know why and why you expect it will continue to do so. It is imperative to assess prospects for capital growth in the suburb and of the property. Read up on different suburbs, and reports about how infrastructure, demographics, economic and social trends may affect growth.
BONUS TIP: Professional advice
If the process seems overwhelming or daunting, or you just want to ensure you’re getting the best return on your investment, seeking advice from a buyer’s agent is a great option. If the seller has a professional on their side, you probably should too. Buyers’ agents have inside knowledge and access to data and industry networks to not only help you find the right property for your strategy, but know how to negotiate, so you can get the lowest price and best terms and conditions.
What’s your strategy?
When considering these factors, make sure they align with your property investment strategy. And if you haven’t yet developed an investment strategy, why not complete our Getting Started form to get the ball rolling.
And, if you’re already contemplating how to tackle the property market in Perth, why not download our free Get Ready to Invest in Property eBook here.
We think you’ll find it invaluable.