Things you should consider before investing in property
With residential vacancy rates declining significantly and rents starting to rise, more people are considering investing in residential property.
While investors have been less prominent in the market over the last few years, property investment is still one of the most popular forms of investment in Western Australia, as it has the possibility to reap many long-term financial benefits for investors.
Achieving success takes time and patience, with only a handful making it past their first investment. To ensure you don’t fall into the property trap, here are some things to keep in mind when looking for your first investment property.
Target audience
Firstly, your investment is not about where you’d like to live but the desires of tenants. Therefore, it’s important to identify your target market and put yourself in their shoes – is it a large family, retirees, or young professionals? Once you have identified this, you can look at features which would appeal to them.
Choosing the suburb
Try not to get caught up on a particular suburb because you prefer the location. Research is a critical part of a successful investment property, which is why it is important to look at the data for a suburb before deciding to buy in that area.
Identifying high-performing properties requires analysis of demand and supply, knowledge of the local demographic, consistent market monitoring and awareness of other key growth factors.
If you’re reading about a suburb that has boomed, chances are it is already too late to be buying in this suburb. Instead, suburbs that are likely to outperform in the long-term are the ones to consider investing in.
Saving and spending
It’s also important to make sure you have a sufficient cash buffer available once you have purchased the property. Doing so will assist if circumstances arise, such as repairs, increase in interest rates or tenants leaving.
If you’re looking to renovate, make sure to prioritise items that genuinely add appeal to the property and are more likely to generate better rental returns. A new coat of paint can give a property a fresh feel and would in most suburbs be a better option than installing a pool.
Source
18 July 2020
Author: REIWA President Damian Collins
