What Should You Look For In An Investment Property

Investing in property isn’t a complex science. Most savvy and prolific property investors have created a formula to determine whether a property is a good investment or not. Having a standard formula helps them ascertain, rather quickly, if a property is worth investing in or not.

8 Factors To Consider Before Buying An Investment Property

If you want to create a winning formula to determine whether or not a property or apartment is worth the cost, these are the factors you need to consider

Commercial and Residential Development

Several residential and commercial developments are beginning to pop up around Sydney’s CBD and on the outskirts. These districts are primed to become new hubs. The real estate development in these regions is a sign of one thing: growth. It shows that developers and investors are noting the potential a suburb has to become an economic corridor. As an investor, looking for suburbs earmarked for development will help you determine where to invest next. While property prices are reasonable and before gouging takes place because of excessive demand.

Neighbourhood Amenities

Besides the amenities within the home, consider the surrounding area and the resources and conveniences available. How far will a tenant travel to a retail district, a sports ground, a hiking trail, or recreational activities?

Many modern households are made up of long-term tenants. Tenants that are looking for a suburb they can call home while they save for a property of their own. Because they could be staying in an apartment or home for between one and five years, the neighbourhood’s conveniences may supersede the properties’ amenities.

Saturation

Market saturation is a legitimate threat to the longevity of your investment. If supply increases but demand plateaus, you’ll be in for quite a big shocker and will be sitting on a property you can neither rent nor sell.

There is no straightforward method to determine whether market saturation could take place. However, you can examine reports that reveal how many units are planned to be added to a market each year. Compare those figures to the number of available units on the market and the population growth for the suburb. If the units coming onto the market surpass growth even with a 1:1 ratio, market saturation could already be underway.

Work Opportunities

A suburb’s potential for growth directly correlates with the region’s job market. Central business districts, and areas surrounding CBDs, are always sought after because of the work opportunities available. However, as city planning takes centre stage, the distribution of work opportunities is beginning to move away from cities and into more remote areas. Provinces are investing billions of dollars to ensure overcrowding isn’t the only option and that economic opportunities aren’t limited to only a handful of cities.

Therefore, savvy investors don’t only look at existing work opportunities but potential opportunities that will increase demand for rental property in Macquarie Park.

School Districts

Because young families make up a growing segment of the rental market, more investors are considering school districts as a determiner of a property’s rental potential. Parents want to send their children to the most prestigious schools that are ideally within walking distance, or at the most a few minutes’ drive from their homes.

Additionally, being in a prestigious school district helps increase property prices, which is essential if you ever want to sell a property in your portfolio.

Public Transport

The convenience of rental often spills into other aspects of life, one example being the method of transportation. Unless many amenities are within walking, or a few minutes driving, distance, public transport should rank highly on your investment property checklist. Potential tenants are most likely going to want access to a bus or train, allowing them to travel to and from work without sitting in traffic.

Price

Profitability will be determined by one thing: the cost of the property in relation to the rental income. Your best bet at determining whether a price is reasonable for investment is to study the rental rates of similar properties over the course of the last 3 to 5 years.

Protection

Whether it’s heritage protection or protected land, you want to be 100% certain that the property you’re buying will maintain its worth over the long run. Often investors don’t consider that a spectacular view can instantly be ruined by a taller, larger block being erected nearby. Or a quiet street becomes a busy highway because of retail development. While development is appreciated, you want to be sure that it won’t negatively affect your investment. Therefore, it’s best to enquire about local protections to ascertain how they will either positively or negatively affect your investment.

If you consider each of these eight factors, you’ll have buying an investment property checklist that can help turn you into a property mogul.