What to look for when buying an investment property

Typically, people purchase an investment property to create wealth from the capital growth and generate income from the rent. Whether you're a first time property investor or experienced investor, below are some things to look for when buying an investment property.

Location is so important, the goal is to buy property in locations that have the potential for strong capital growth and strong cash flow (rental yields). You need to look outside of your own backyard and consider buying property in different locations across Australia. Look for areas that have strong and diverse employment, good lifestyle locations where people want to live, strong infrastructure projects, transport links, close to amenities like shops and schools, and have a low vacancy rates.

Whether you are looking to buy a house, unit or apartment, the type of property you choose for the location is important. You need to consider the demographics and the types of properties in the area. The property needs to match the local area where you are buying. For example, buying a four-bedroom property in a location that is typically units with 1 or 2 people per dwelling won't have the same appeal and may be a little more difficult to sell when the time comes. Understanding the level of owner-occupiers, renters and public housing in an area is also important as that can also impact price.

The property itself should appeal to the broader rental population. You don't want to exclude potential renters and have the property sitting vacant, costing you $ in lost rent. A common example I see is properties that are not fully fenced. As a result, you are likely to exclude pet owners with dogs or will need to consider paying for fencing. Kitchens and bathrooms are always important for potential renters. If the location is in a warmer climate, then you should consider air conditioning throughout the property, this will affect how much rental income you receive. If the rooms are a variety of colours, consider an internal paint to make it more attractive for potential renters.

If the property has not been maintained to a good standard, this will also exclude potential renters and you may find the property sitting vacant longer or you will have to discount the rent or consider spending money to complete any maintenance to ensure the property is brought up to a higher standard. A poorly maintained property will also affect the quality of renter you attract.

When looking to buy an investment property, always start with your goals and take into consideration your current property portfolio, your financial objectives, and your risk profile before selecting a property.