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How to choose the right investment property

The biggest goal of an investment property is to grow wealth, which means what you’re looking for in an investment property may be vastly different from what you would look for in a home to live in.

Here are some important factors to consider when choosing the right investment property for you.

1. Have a strategy

When you buy an investment property, you need to go in with a strategy. Ask yourself, do you want to focus on capital growth? What about rental yield? Or negative gearing? (Just to name a few). There are many different investment strategies - these are just the most commonly used.

Taking the time to research all the different types of investment strategies and aligning them with your own goals can help you with the research process and narrow down a suitable property.

2. Research the suburbs you’re considering buying in

Location is one of the biggest driving forces for people when it comes to choosing where to buy or live. Tenants want to be close to amenities, their workplaces, schools, the CBD, public transport, hospitals, parks, and so on.

If your investment property is close to schools, it’s likely that your tenants will be young families. Likewise, if the property is close to the CBD, young professionals are likely to be attracted to your property. Depending on the kind of tenant you want to attract, you should consider this when researching suburbs.

Investors can generally be a bit more flexible with regard to location when buying an investment property because they aren’t blinded by emotion the way owner-occupiers are. This can be a help and a hindrance, as it means the options are endless.

You also want to consider the potential for capital growth, vacancy rates, and rental yield when looking at potential locations to invest in.

3. Consider the type of property

The type of property you invest in will play a big role in your success in renting it out. A detached house with a fenced backyard will be popular with many types of people (particularly those with pets) such as families, house shares, groups of friends, couples, and so on, whereas a small one-bedroom apartment will only attract young singles and couples.

You need to consider what kind of tenant you want to rent out your property, as well as your own investment goals. Do you want to eventually move into the property? Or is it just an investment?

Read our guide to investing in a house vs an apartment.

4. Consider the features of the property

Even though you won’t be living in the property, you still need to consider the features of the property and if they will attract tenants.

For example, a home office space will be looked upon favourably by tenants who work from home. A garage and extra bathrooms will be attractive to families and house-share situations. Other features to look for that will make the property more appealing to tenants include air conditioning, outdoor entertainment areas like decks or balconies, parking (for apartments), an elevator for apartments, etc.

The age of the property is also a consideration to make. Older properties can require more maintenance and repairs than new properties.

5. Does it fit your investment strategy?

It’s important to make an informed decision when choosing an investment property, but it’s equally as important to pick the right investment loan. That’s where we can help.

If you are ready to get started on your investment journey, call us to chat with a friendly lending specialist or chat with us online or check out our competitive low-interest investment home loans.