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Top 4 Things to Know When Buying an Investment Property
Investing in property can be very rewarding, but consider the following four factors before you start your search.
Is the Property Healthy Home Compliant?
The deadline for Healthy Home Compliance is upon us and as such it makes sense to ensure the properties you look at are Healthy Homes compliant. From 1st July this year, all private residential rental properties must comply with the full list of regulations for the Healthy Home Standards within 90 days of any new, or renewed, tenancy.
Having a compliant property not only means you’re ticking all the legal boxes, but a warm, dry, comfortable home is likely to attract tenants. If the property isn’t compliant, get an assessment done to see how much work needs to be done to get the property up to scratch.
Owning a Healthy Homes compliant property will also be a great advantage down the track when you are considering Selling Your Investment Property.
Look for Location, Location, Location
You’ve heard it before, but that’s because it’s true. When deciding where to buy, location is key. Consider your ideal tenants and where they would like to live, and look for growth areas where there is a high demand for rental properties. The perfect property will be close to transport, schools, parks and shops. When looking at properties, take time out to go for a walk around the block to get a feeling for the neighbourhood. What attracts you to the property will also attract potential tenants. Also be sure to look out for red flags that would likely put tenants off the property.
Understand Potential Yields
Before you dive in, it’s important to consider your motivation for investing in property. Are you driven by capital growth, or are you motivated by cash flow? Exclusive suburbs may appear to have a large potential for capital growth, but you may struggle to find tenants who can afford a rental level that makes such a large investment viable. Your rental yield is the profit generated each year from your investments as a percentage of their value. A high rental yield will equal greater cash flow. Assessing the potential rental yield of the property is an important consideration before you buy.
Is the Property in Good Condition?
It’s important to consider the condition of the property you are buying. Always do your due diligence and get a qualified builder or engineer to assess the structural soundness of the building. Take a close look at areas that need upgrading and assess the cost of this work against the potential yields for the property. Don’t skip this step – you could live to regret it.
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