Investors would buy for the short term, renovate, and flip(sell) the home on for a profit. Now many people are in it for the longer term, deciding they would like to have a second home, or more likely, a rental property.
Choosing where to purchase however can be a time consuming task, so let us, at Estero Property help you narrow the list of potential property investment candidates.
This is perhaps the most important element when it comes to rental properties. Start by considering the type of tenant you wish to attract. Are you looking to rent to a family? Students? Couples? Single Professionals? This can help determine the size and style of home to select, because you will be aware of the potential space needed, and specific amenities to search for.
Apartments are an attractive property investment option because they bring multiple types of tenants. However they also come with body corporate and strata fees, usually each quarter, which can really add up. Opting for a new home may reduce costs on improvements as well as provide impressive depreciation allowances, which can bode well for property investors. In saying that, older houses are usually the ones that tend to bring in the highest, most consistent income. It is always worthwhile to research potential rental income for the area(s) you are looking in.
Alongside rental income, research the benefits of living in the area. Find out the population growth and major industries. Discover the general age of the population (is it a College town? Retirees?), average wealth and (un)employment rates. Confirm suitability for your target tenants. If Memphis or Charlotte is on your list, we would be happy to provide you this information.
Next, look in the parts of town that best meet the needs of your tenants. Think about proximity to possible schools, public transport, shops and services, as well as accessibility to main areas of employment (such as the city centre). What and where is going to be most important for these individuals? Remember, when you select a property that matches your demographic, you are more likely to keep it tenanted.
Dollars and Cents
Finally, know your budget and what you are hoping to earn in return. Search within your price range. See if you can find a neighbourhood that has a gap between market rents and market sale prices. Then, if possible, try to spend no more than 60-70 times market rent on property, so you wind up maximising your return. This is often easier said than done, as neigbourhoods with better rents than pricing tend to self-adjust, but it always pays to look.
If after all this you still have questions about property investment, talk to a credible professional. In fact, feel free to contact us at Estero, as we would be happy to help.