How to Choose a Valuable Investment Property

Investing your hard-earned money in property is something that can prove incredibly rewarding without posing too substantial a risk. It is, however, still a decision that requires a lot of careful thought and research, as property investment–like any investment in a post GFC world–needs to be approached with a sensible outlook. If you’re considering investing in property, it is helpful to keep in mind the fact that your uses for the property will determine the parameters for what you look for. In other words, the same things you find attractive in a house you are buying for your family to live in will not necessarily match those that are financially sensible in a property you intend to use as a rental, or as a renovation and sell-on project. We’ve put together a short guide to what to look for in your investment property, depending on your situation.

Buying a Home

We all know that it takes certain qualities to turn a house into a home. If you’re looking for a property in which you and your family will live, your own real estate desires will guide many of the decisions you make. Aspects like whether or not a property is close to good schools, in a safe neighbourhood, has ample room for your needs (both now and in the immediate future, especially important to remember if you are planning on starting or growing your family) and whether it meets your standards of living. Having said this, remember to view even your family home as an investment, because that is what it will ultimately be. Don’t ignore basic factors that make a home a valuable investment because of an emotional attachment to a home–when the time does come to sell, you’ll be glad you did.

Buying a Rental

If your aim is to buy a property and use it to generate rental income, then you need to put yourself in the mind of a tenant in order to judge its suitability. Check the rental market in the local area in order to gauge the average cost of a roughly equivalent dwelling. It’s also a good idea to think about the kind of tenant the area attracts. If the area has a lot of senior citizen residents, a one-floor home might be the most attractive for their needs. If, however, the area is closer to the city, two-story dwellings or a higher-level apartment might be more prudent, as inner-city areas usually have a higher crime rate. In a university town, if it is your aim to attract students as tenants (a wise idea as there is a never-ending flow of them in university towns), then something close to the university as well as local amenities will ensure you’re never short of tenants looking to rent from you.

Buying a Fixer-Upper

If you’re interested in renovating and re-selling, it’s location that really needs to be your prime focus. A good location will ensure a good return on your investment, and the best investment is one in a sought-after area that is selling for a low price due to age or style. You also need to have a good understanding of exactly how much a renovation will cost you. It is not good enough to assume you can perform a standard renovation on any property for around the same price–depending on what needs to be done the price could vary wildly, so before you commit to buying, it is important to get an idea of how much you’ll be spending after the sale. A solid structure is also of the utmost importance. While you may be planning to renovate or entirely gut the place, if the foundations and structure aren’t secure, walk away immediately.
An investment property is not only a great way to build your assets and equity, it is on the relatively safe end of investment, as long as you approach it with caution and consideration.

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