There are a lot of things to consider when investing in residential property. Read our eBook to find out more about investing or talk to one of our experienced agents who can give you advice on how to approach an investment property.
What should you consider
There are a number of questions you can ask to determine whether this is the right investment choice for you. Consider the perspectives and questions for yourself, your accountant, your bank and your agent. The following 10 rules should be examined when approaching a potential property.
- Understand supply and demand in the area you are purchasing.
- Understand what tenants look for in a property to rent, such as thoroughly clean and fresh accommodation, eg new paint and carpets, heating and cooling, low maintenance surrounds, good security and safe environment, close proximity to amenities, value for money etc.
- Look for good infrastructure in the suburb you are looking to buy in. Are there schools, shops, public transport and recreational facilities?
- Has there been a trend of capital growth in the past compared with other local suburbs?
- Look at as many similar properties as possible and look for good value not an emotional attachment.
- Work out your rental return based on 52 weeks p.a. (or if wanting to factor in a vacancy allowance, 48 weeks just in case). Rental return as a percentage is your gross yield and is calculated as follows; Rent per week x 52 weeks in year / purchase price x 100. Eg. $250 per week x 52 = $13,000 / $220,000 x 100 = 5.9% gross return.
- Listen to advice from family and friends but remember it’s your money not theirs.
- Seek independent advice from professionals
- Always get a pest and building inspection carried out by licensed and qualified tradespeople.
- Understand your legal rights and responsibilities as a buyer and landlord.
You can read more details and further information in our eBook ‘Investing: Residential Property’, available for download here.