5 Things All Good Investment Properties Have
Investing in property is one of the most popular ways to build your wealth, and there’s never been a better time to enter the market.
Here’s what to look for in the ideal investment property.
1. Quality local amenities in a great location
Put yourself in your tenant’s shoes. Even the most immaculate home with all the extra trimmings isn’t worth the high rental price if there aren’t quality services and amenities nearby. Before falling in love with an investment property, take a step back and tour the neighbourhood. Are there well-maintained parks, grocery stores and public transport options within walking distance? How far is the property from the CBD, good transport links, and what about other amenities that could attract renters such as gyms, cafes, workplaces and recreational facilities?
2. Close proximity to schools
The idea of ‘rent for life’ has been around for years, but for younger generations, it’s becoming the rule rather than the exception. According to data from the Australian Institute of Family Studies, young couples and single parents are less likely to own a home compared to several decades ago. That means people with young children are always looking for rentals that are close to good-quality schools and other educational facilities.
3. Low vacancy rates across the suburb
Beware buying in a suburb that has unusually high listing numbers and high vacancy rates. It could mean that the neighbourhood is oversupplied with rental properties, unpopular or even in decline, or that seasonality is an issue. For example, while buying a property near a university means there will be plenty of competition for your investment property at the start of the school year, if you don’t agree to leases in the correct way, it may sit empty for weeks or months over summer.
If vacancy rates are high, could you afford to keep up with mortgage payments while your property sits empty?
Right now in Brisbane vacancy rates are low across the board. The Brisbane-wide vacancy rate is sitting at 1.3%, indicative of a landlord’s market, with plenty of tenant demand.
4. Safe neighbourhood with low crime rate
Australians are increasingly looking to settle into a rental home for the long-term. So if you want to secure tenants that stay in your property for several years, make sure it’s located in a good area. The best way to do that is to do your research and also spend time in the neighbourhood. You can also find crime statistics for every part of Brisbane – the Queensland Police Service’s Online Crime Map is a great resource that could help you decide on the right investment property.
5. Solid rental yield
Rent is your main source of income as an investor, so it needs to be enough to cover mortgage repayments, council rates and other expenses like maintenance and repairs.
Rental yield is a way of calculating the annual return you receive on an investment property. Usually expressed as a percentage, your gross yield is determined by dividing the annual rent a property receives by its value. Net yield takes out expenses like maintenance, strata levies and other costs.
Right now in Brisbane, gross yields are pretty appealing for investors. According to SQM research, units are sitting at 5%, and houses at 3.4%, compared to yields in Sydney of 3.4% for units and 2.2% for houses.
6. Future capital growth
Rental income is one side of the equation, and capital growth is the other. Brisbane is set to lead the nation in housing growth, with dwelling prices forecast to surge 9% throughout 2022. And with borders reopening and Queensland already recording the highest interstate arrivals in 2021, the state capital’s housing market is ripe for investors.
We make property investment easy
Purchasing the ideal investment property is just the beginning. Finding – and retaining – good tenants, managing maintenance requests, and dealing with legal and regulatory requirements can take up a lot of your free time. So why not choose a property manager who can provide you with high-quality management services? Find out more by contacting the Aurora Realty team today.