Choosing an Investment Property
Choosing an investment property can be a tricky task if you don’t have the knowledge of the real estate experts.
Here in our article on choosing an investment property we share all our top tips from our directors 45+ years in selling and renting experience.
Firstly we discuss the the most important factors you should take into consideration when purchasing an investment home. Following these tips will help you:
- Increase the profit on your return
- Ensure you find a good tenant fast
- Choose the correct location
Return on Investment
Return on investment is probably one of the most important considerations when purchasing a property. However you must be aware when purchasing, the gross return may show six or seven percent. However from this gross return you need to take other factors out your expenses, which can include:
- Owners corporation fees if applicable
- Insurance on the buildings
- Contents insurance, including your carpets, drapes, light fittings
- Maintenance on the building. There is generally always maintenance required to keep the property in a good condition. Always remember if you take care of your property the tenant will generally always take care of it also.
- Council rates and water rates. It is the tenants obligation to pay water, electricity and gas usage only
When you take these into consideration your net return may not show as much. However always remember you purchase property for capital gains. Capital gains comes with time. This is why purchasing Real Estate as a long-term investment.
Location of Investment House
When purchasing an investment property there are some very important points to look at before purchasing and these include:
Transport is a major concern for many tenants. Quite often they may not have a car to commute to work or shops. So when looking for an investment property look at the bus system location to railway line. You should ask are these in walking distance in Dandenong central?
There is great opportunity to purchase a variety of properties from one bedroom flats to luxury townhouses. These can all be in a Superb location. Another great benefit of Greater Dandenong is the railway with regular trains to Melbourne, Cranburne and Pakenham. Dandenong also has a great bus system. The bus system give you a easy access to Endeavour Gills shopping centre, Waverly Gardens and Chadstone. If you want to venture out there is also access to the Glen or Rowville shopping centre. We can’t forget Parkmore as well.
Location to the shops is one of the other major factors when the tenants are looking to rent a property. This also determines the amount of rent that the property will return
Facilities in the area will also factor on the demand of a property for example
Also look at other conveniences that people want to be handy to.
Something else to look at when purchasing an investment is the industry in the area. This gives tenants access to employment that’s not far away from where they are leasing.
Look at Other Properties for Rent in the Area
When choosing a property it is a good idea to look at what other properties are available in the area. This will give you an indication as to what is a sort after area for rental properties. It would be assumed that if you purchased in this area you should have no problem in:
- Letting the property fast to good tenants
- Having a very low vacancy rate
- Increase your rental income and profit as s strong rental area will determine the potential weekly
Mistakes Made When Purchasing an Investment Home
Below we discuss one of the most common mistakes made when purchasing an investment property.
Choosing a Property That Suits Your Requirements and Not The Tenants
Purchasing a house to buy as an investment that you like and that suits your needs is a common error by landlords. For example, one of these situations (as discussed previously) is location. Investors on some occasions purchase a property that could be in a remote area or an area that is very unique. To a prospective renter this will reduce the amount of appeal of the property. It could also reduce the rent furthermore. There is also the problem that it may take longer than expected to let the property.
We have all heard the saying in Real Estate the 3 major factor in purchasing is location, location, location. So when purchasing a house have location as your prime factor!
We hope our tips on choosing an investment property has helped you to make an informed decision. If you need help with buying selling or renting out your property our expert Real Estate agents and property management company would love to help.
Contact Us today.