When you first entertained the concept of investing in a property, you probably didn’t imagine there would be so many choices to make and factors to consider. From arranging an investment loan to researching locations, making sure you invest wisely is a challenge, but it is one that often pays off – and pays off well – when done properly.
One of the most important decisions you’re facing is choosing the actual property. Your final selection will play a part in the success of your investment, influence the kind of tenants you rent to, and could even determine where you live in the future. This isn’t something to be taken lightly. Here are three key questions to pose to yourself when tossing up your options.
What Can You Afford?
Yes, unless you’ve just won the lottery or have been saving for an incredibly long time for this, you’ll be using a loan to purchase your investment property. But, whether you get your investment loan from a well-established organisation like BOQ or a lesser-known lending company from your neighbourhood, this loan doesn’t give you free rein over the properties that are viable for you to invest in.
How much of your savings can you dedicate to a deposit? How many years do you really want this large debt hanging over your head? Consider your current circumstances and try to envision the future of your finances while determining the price bracket your ideal investment property would fit in to.
Where Is It Located?
Many investors like to choose properties in their own city. This does present the benefit of allowing you to keep an eye on how things are going, plus you’ll have local knowledge of the area to help you make an informed decision. On the other hand, close proximity to your investment property could feel stifling or even restrictive. A benefit of investing elsewhere is that you’ve opened up an opportunity to easily move to a new place should doing so become desirable or convenient.
Other locations may also prove more lucrative than your own neighbourhood, depending on the relevant market trends and the demand for accommodation in the area. For example, a town with an older average population might not present a great deal of potential leasers, while a city with several universities is likely to see fierce competition for rental properties. Plus, with a credible property manager, you should be able to relax with the knowledge that your investment is in good hands, even if you can’t check in yourself.
What Kind of Tenants Would You Like?
The answer to this is obviously the most reliable and trustworthy tenants that apply, right? Well, to ensure that you’re attracting the ideal tenants to your property, it’s important to choose a place that comes with the features that these people will find appealing. Sure, some of these features – such as security and landscaping – can be added after the purchase. Others, however, can be more difficult or even impossible to provide in hindsight, and these could include a nice view, ample storage space, and parking spaces. If you want the best possible people accommodating your property, you need it to be the best possible property.
Also consider the specific type of people you’d be most comfortable entrusting your property’s wellbeing to. If you’re a family-oriented individual and would like to give another family a home, consider a house in the suburbs. If you feel a young professional would be the ideal candidate, lean towards an inner-city apartment.
Unsurprisingly, the right investment property for you ultimately comes down to you. The types of property you like, the types of people you trust, and your own financial circumstances – these personal factors and others will likely be reflected by your final choice. Carefully considering the questions raised above should lead you towards making the right decision.