How To Choose A Profitable Investment Property

Did you know that nearly a third of Australians rent?

According to housing data by the Australian Bureau of Statistics, only 66% of Australians own their own homes, while 32% said they lived in rented accommodation.

As homeownership rates fall, the number of households that turn to renting a home will continue to rise. And that provides opportunity for profits.

Investing in real estate

Owning residential property has long been considered the Australian dream. And for the one in twenty Australian households that own four or more properties, that dream has truly come true.

Investing in real estate can create long-term wealth.

With the Australian property market prone to fluctuations, a successful real estate investor must appreciate not just market forces, but also what tenants want.

Avoiding oversupply

It’s true, in some areas of the market there is currently an issue of oversupply. This occurs when large-scale developments flood the market with too many homes, and there are not enough buyers. As a result, prices drop.

Property investors can avoid this problem by using these tips:

  • Look only in popular and established suburbs, not newer residential areas.
  • Search for suburbs with a growing population.
  • If buying off-the-plan, look for quality residential property developments.
  • Choose boutique property developments rather than large-scale

Services are important

Services and amenities available in a suburb have a direct correlation with your rental return. They will also affect resale.

One of the most important factors to consider is easy access to public transport, including the frequency of services to the CBD.

If you’re looking at family-friendly properties then also consider the distance to popular schools and childcare facilities. A walkable distance is especially desirable.

Access to supermarkets, cafes, and restaurants, as well as parks and green spaces,  should also be factored into your decision. Prospective tenants will be considering their lifestyle, not just living within the home.

Think like a tenant

Visualise your ideal tenant when purchasing an investment property. Then make sure the investment property caters to the needs of that kind of tenant.

You can purchase a property in the best suburb with great access to services, but if the space isn’t functional, your ideal tenant won’t be interested.

When viewing an investment property, consider the space and layout with a critical eye. Your aim is to find a property that will appeal to a long-term tenant at a higher rental yield, rather than turning over tenants every six onths.

These features will help achieve a better rental yield:

  • A bathtub
  • A toilet separate from the bathroom
  • At least one parking space
  • Ample storage
  • Outdoor space such as a balcony or courtyard
  • Internal laundry
  • Easy access to NBN (or fast internet) and cable TV
  • Security features

Protect Yourself From Market Fluctuations

With over one-third of all Australians now renting, there is a definite need for rental properties.

An investment strategy that focuses on quality property in handpicked growth suburbs will offer shelter from large market fluctuations.

This strategy will assist in attracting long-term tenants who seek to create a home and reduce the risk associated with constant turn-over of tenants, maximising return on your investment.