A preferred method of investing is through property. Property investment is lucrative, for the simple fact that people will always need homes, and businesses will always need a location to operate from.
Since the financial crisis, people are trying to take ownership of their own financial future, and this has made them even more interested in starting to invest or build their portfolio.
So how does one choose a property to invest in? We have narrowed it down to 8 different factors in choosing the best property investment.
- Capital Growth Rate
The Capital Growth rate is hard to determine exactly, as different market factors come into play. However, overall, property prices are rising quite sharply, which would suggest there will soon be a slowing of growth, albeit not a decline. Capital growth is also most likely to be in major cities like Sydney, Melbourne and Brisbane.
- Population Growth
Population growth is equally important. The next generation will require a place to live, after all. With it becoming increasingly difficult for people in Australia to buy their first home, it is likely that there will be an increased demand in properties as well. However, this may also mean that there will soon be a slowing in population growth, as people find out that they cannot afford to have more children.
- Residential Vacancy Rate
If you purchase an investment property in an area with high vacancy rates, it is likely to be an undesirable neighbourhood. This means that it would be difficult to rent out the property as a landlord, and to sell it at a later stage to gain profit from the investment.
That said, if the property is truly cheap, this can work as an advantage should the neighbourhood be planned for regeneration.
- Established and Planned Infrastructure
In line with regeneration, you need to understand what is planned in terms of infrastructure around the property. Better access to certain services, for instance, will increase property value. However, the addition of a runway to an airport at the back of the property would lower the value.
- Median Property Price
An investment property, if at all possible, should be just below the current median property price. This means that you have a better chance of selling it at a profit later on. So compare this price to the rest of the geographical area, or similar communities, to help you determine if the area is more or less desirable.
- Rental Yield
Investment properties may be purchased with the intention of renting them out for a period of time. This yield needs to cover at least your mortgage, and preferably other costs as well. In fact, some people can find having a rental home to be very profitable.
- Tax Effectiveness
Properties come with property taxes. These may also be associated with the type of mortgage you have. Hence, ensuring you choose something that is tax effective will ensure a more secure investment.
- Little Luxuries
The little luxuries are the things you personally care about. These are things like a great view, a modern kitchen, or an extra bedroom.
Our team of experts can you help you select the best investment property and ensure this 8 selection criteria are meet. Contact our team today!