Superior investment options stand out when you know what you’re looking for, but even seasoned investors rely on checklists and research to assess the potential of property investment opportunities to find a good deal.
What may appear to be a bargain could end up costing more in time and effort than another for sale at a higher initial price.
In a market where many similar properties are on offer it can be the comprehensive checklist of assessment criteria that is the difference between buying an asset or an albatross.
Methodical research will help you to make unemotional assessments and allow the best option to become obvious among several investment choices.
Buying property should not be a beauty pageant, but a clinical assessment of the balance sheet mixed with a healthy dose of market research.
Key factors to consider when screening properties:
- The land to building ratio: Land is the key driver of capital growth, so aim for properties where the land value accounts for at least 70 per cent of the total value of the property.
- Attractiveness of the location to tenants: Most will want to live close to transport, schools, shops, lifestyle facilities and many may value being near the ocean or river.
- Attractiveness of the property to tenants: Does it have air-conditioning? How secure is it? How much parking does it have?
- Assess the rent values of comparable properties: Can you afford the holding cost. Also consider if any reasons exist for likely growth of rental prices in the area and for your particular property.
- Expected maintenance costs of the property: Anticipation of upcoming costs – high or low – can affect the cash flow position of the property greatly, and be the difference between making an offer and continuing your search.
- Location of the property within the suburb: Is it in a superior or inferior location or street? This can affect rental rates and resale.
- Long and short-term historical suburb price growth: If it has recently begun to do well, try to understand why and why you expect it will continue to be a winner.
- Assess capital growth prospects for the suburb and for the individual property: Limit the assessment to facts only and consider how infrastructure, demographics, economic and social trends may affect price growth.
If the process of in-depth research is too daunting, time consuming or as savvy investors you want to ensure the best return on your investment, then consider seeking advice from a buyer’s agent.
Think of it this way: If the seller has a professional on their side, you probably should too.
Property buyers agents have the experience and inside knowledge of the local market and know the tricks of the trade to give you get the upper hand in a negotiation, ensuring you pay the lowest price on the best terms for your first investment property.
If you’d like to explore your opportunity to help build your wealth through property, then call us on (08) 9381-7450. Or request a FREE Starter Pack at www.propertywizards.com.au/free-starter-pack/.
by Trevor Dunkley – Property Investor, Advisor, Coach, & Director of Property Wizards Buyer’s Agency. Phone: (08) 9381 7450 Email: info@propertywizards.com.au
