How to find the most desirable investment property with the best chance of good returns.
You wouldn’t want to take a guess at how many suburbs there are in Australia, let alone homes. So how do you select where is the best place to invest? The key is choosing a highly desirable property. Purchasing a home that everyone wants to live in will help ensure that you get good capital growth and/or rental returns.
The golden word for property investment is average. This may seem contradictory as we just mentioned desirability, but having a desirable property means the majority of the population want to live there. As a result you should select a very average property with a very average value. Why? Because the bulk of the population live in these homes which makes them well sought after.
…you should select a very average property with a very average value…
Land content is another attribute that makes properties desirable: land is scarce. So houses are obviously better than units, having a much higher land content which makes them usually less risky.
Investing in units can have a good outcome, but you will need to be extra careful in choosing where to buy. We recommend purchasing in an older, smaller unit block. With rents quickly rising, tenants are not going to want to pay extra for the trimmings of the luxury new apartments. Another reason for purchasing in older unit blocks in that maintenance is usually less, meaning cheaper body corporate fees.
We recommend smaller unit blocks because uniqueness is derived from the fact that there are unlikely to be many up for lease or sale at the same time as yours. This means the vacancy period between tenants is likely to be less and you won’t need to price your rental or selling price as competitively.
…the more bedrooms you have, the more people can live there and share the cost of renting…
Whether you are buying a house or a unit, a property with lots of bedrooms is also a sought-after feature for renters. This is because the more bedrooms you have, the more people can live there and share the cost of renting, which of course is very attractive to tenants after cheap rents.
The obvious characteristic that will help ensure you get good returns is investing in a good location. By this we mean an area that is well serviced by transport, close to shops, schools, medical facilities with plenty of job opportunities. There needs to be a reason for people to want to live there, and the more facilities there are, the better.
To help with the process of finding an investment property that is likely to do well, Residex has put together the Predictions and Best Rent report. The former is more tailored towards investors that are owner occupiers, whilst the latter is for investors after capital growth and rental yields.
In both these reports we have complied suburbs which are predicted to have good capital growth and/or rental yields over the next five and eight years. Combining this with the attributes mentioned above, buying an investment property really does become as safe as houses.
(Source: By J C F Edwards, 20-August-2007 )
