Pick a Winner — Tips for Property Investment

The decision to purchase an investment property is always a major one, especially when it’s your first. Even though the property market has proven itself time and again to be a low-risk, high return investment option, the prospect of outlaying all that cash and committing yourself to regular repayments can be a daunting one. Let’s take a look at a few tips to make sure you pick a winner in the property market.

Do your homework

There’s no getting past this one — the property market is not a game of chance. You need to be smart with your decisions and ensure you’ve done plenty of research, consulting professionals and experienced investors to make sure you have the most accurate information.

It may sound obvious, but when choosing a property to invest in, the most important factor to consider is whether or not renters are going to want to live there. To attract the most renters and ensure your tenancy rate remains high, choose properties that are close to amenities and public transport. Additionally, ensure there are employment opportunities within commuting distance — the closer the better.

Having nearby schools is another consideration to welcome potential renters with children, but bear in mind that the majority of tenants are likely to be workers or students without school-aged children, so employment and public transport should be the main focus.

Which type suits you?

Once you’ve chosen an appropriate area, there are other things to consider, such as what type of property you wish to invest in. For example, would you prefer a unit or a house? Units are generally going to be cheaper and are more likely to attract working tenants, and if you can find a unit near a university or educational facility, you can tap into the student market as well. The rental yields of units are high, but the tenant turnover will be higher too. You’ll also have the burden of dealing with the body corporate, which may force you to fork out money for refurbishments you didn’t bargain for.

Houses, on the other hand, are more likely to attract families, who often desire a front and backyard. Generally, tenants in houses are more likely to stay for longer, but rental yields aren’t as strong either due to the higher costs associated with housing land. While capital growth is likely to be better with a house, you also have the burden of council and water rates, which are your responsibility as landlord.

Generally speaking, if you’re looking for a more affordable option with higher rental yields in the short term, a unit is probably your best option, but if you’re looking for a long-term investment with great capital growth over time, a house might be the way to go.

Patience is the key

Remember, property investment is a long game. While it is possible to make money in the short term by ‘flipping’ properties, this challenge requires a great deal of expertise and is best left to — funnily enough — the experts. However, if, like most people, you’re looking to secure your financial future, it’s important to be patient and remember that, as long as you’ve chosen the right area and the right type of property for your goals, any market slumps will eventually even out, and over time your investment will pay off.

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