With rental prices strong across Australia, if you’ve ever considered investing in bricks and mortar, now could be the perfect time. Median weekly rental prices for houses increased by 0.8% in the March quarter with unit rentals rising 0.4%, according to figures taken from the Domain Group Rental Report. Melbourne in particular saw the best increase with 2.5%, while Sydney rents also remain at record levels.
Andrew Wilson, senior economist at the Domain Group, believes upward pressure on rental prices will continue during 2015. “The prospect of lower interest rates, relatively high comparative yields and capital growth will continue to fuel investor activity,” he says.
While high rental returns and continued capital growth are certainly key factors to take advantage of right now, there are three other key things to consider if you’re keen to be a landlord and are looking for an investment property to purchase.
Location location location
It might sound clichéd, but location is one of the most important things to take into consideration when investing in a property.
Not only does it need to be in an area where capital growth is expected to continue, you also need to look at demand.
Choose a location where there is a low supply but high demand, and also consider the type of property you are purchasing, and what renters want. For example, if the area consists of family homes with high rents and high demand, buying a small unit in that area isn’t likely to be the right choice.
Proximity to schools, healthcare and shopping precincts is always sought after by tenants, as are convenient inner-city locations.
What to look for when you go to inspections
A number of things need to be considered when inspecting the property with a view to purchasing it for investment.
Questions you might want to ask yourself include:
• Is it appealing? And to who? Families, couples, professionals?
• Is it suitable for tenants? Luxury fixtures and fittings are probably not what you’re aiming for in a rental property!
• Does it have an attractive and workable floor plan?
• Does it have good light, orientation and ventilation?
• Is it equipped with ample storage?
• Are the main areas such as bathrooms and kitchen in good repair?
• Are the fixtures and fittings in good working order?
• How old are the appliances?
• Is there heating and cooling?
• Is it well secured?
The building itself
The decision to buy an investment property is a huge commitment, so every precaution should be taken to ensure the property you buy is going to meet your investment goals, and isn’t going to require major repairs or too much ongoing maintenance.
Although a property may look sound upon initial inspection, the best way to be sure that there are no hidden surprises is to organise pre purchase building inspections in Sydney or anywhere else around the country. It’s important to make sure you have a professional licensed inspector, and it’s worth being aware that you might also be able to purchase an existing report for a property, which can you save you money – especially if you are considering a number of different properties.
A pest inspection is also a wise investment, to make sure your new property doesn’t have a problem with termites, which can be difficult and expensive to deal with.
Purchasing an investment property is a decision that requires thought and research. If your research is thorough, your sums add up and all your questions about the property can be answered satisfactorily, you are likely to find yourself on the path towards being a successful investor and landlord.
By Darel McBride
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