What should I look for in a rental property?
From an investment perspective, a rental property is best when it is located close to transport and centres of employment. Typically, this means properties within a 10 km radius of town centres of CBDs will perform better over time.
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Tenants like the same fundamentals in a home that you do so look for bright and sunny aspects, neutral colour schemes, good security, parking, storage, and modern conveniences like air-conditioning and dishwashers.
Ideally, your goal should be to buy a property that will deliver maximum capital growth over time. This depends on the three laws of real estate; position, position, position. Also, talk to your mortgage broker about the areas that banks are happier to finance because this generally provides a good guide to areas of lower risk.
Likewise, rental yields differ from area to area, so do your homework. You should be aiming to invest for the medium to long-term and will need solid cash flow to maintain your mortgage repayments.
Think about the demographics of the area in which you want to invest as well. If you’re buying a property near a university, more bedrooms are likely to be more popular with students than a big garden. By contrast, a big garden and a pool will be far more appealing to tenants in a family area.
When it comes to buying an apartment in a Strata Title or Company Title building, make sure you obtain a report on the building’s finances and management from the company that manages the building. This could reveal whether there is any major upcoming maintenance on lifts or pools, or whether there are major future expenses such as roof replacement or fire safety compliance work. With houses, conduct a building and pest inspection before buying.
Above all, focus on buying with your head and not your heart. Many investors look to buy something they would be happy living in but this can lead to mistakes. Stick to the principle of buying a quality property in a good location with all the features that will keep your property rented. That way, when you come to sell, another savvy investor will be prepared to pay a good price for your property.