Investment

What to look for in your first investment property

Emma Slape | April 14, 2022
What to look for in your first investment property

If you’re thinking of buying an investment property to boost your portfolio, you’re not alone. According to the latest statistics from the ATO, there are a whopping 2,207,893 property investors in Australia – that’s 20% of all Australian households.

Becoming a property investor for the first time can be exciting and very rewarding – if you make the right choices, that is. Real estate can be a tricky business which is always daunting for a new investor. But when done right, you can enjoy passive income for years to come!

So what should you look for in your first investment property? Read on to find out.

 

The perfect location

When it comes to choosing the perfect first investment property, it all comes down to location. This determines the rent you can charge and the type of tenant you’ll attract.

Put yourself in your future tenant’s shoes. What do they want in a home? According to mebank.com, renters want a house close to public transportation, shopping, food and schools. So do some research and choose a suburb in an affordable area close to public transport and schools.

Then have a closer look and find areas with low vacancy rates – this statistic counts the number of vacant or empty properties in an area, and it’s a great way to determine rental demand. You will tend to find anything within 20km of the city always attracts solid tenant enquiry.

 

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Should I invest in a house or unit?

Choosing a house or a unit for your first investment property can be confusing – which is why you should always do your research first.

 

Units

Units are generally harder to sell than houses, as they generally receive less interest from potential buyers on the Australian market. Because of this, banks consider units ‘risky’, with many refusing to approve loans for apartments less than 50m2.

But according to the Australian Bureau of Statistics (ABS), the number of people living alone will increase from 57% to 105% over the next 25 years. Single adults, Dual Income No Kids couples (DINKS) and single parents prefer to live in low-maintenance units close to the city. So what you may lose in capital appreciation, you may make up for in rental yield.

 

Houses

If a house is in a suburb or area with a greater credit risk – for example, high unemployment or crime rates – banks will possibly not approve your loan or charge more interest. That’s because properties in these areas are less likely to sell down the track.

However, unlike a unit, a house will increase its capital growth the longer you own it. This is because the land and dwelling value determine the cost of the property. And since you will own all of the property, you can make as many upgrades and renovations as you please – increasing your rental income and the quality of tenants.

 

Choose a property that’s low maintenance

No one wants to spend all weekend doing home repairs. Your time and money are valuable. And your tenant doesn’t want you constantly around either. So choose a property that is easy to clean, in good condition and low maintenance.

A property that requires work will ultimately eat into your profits – not to mention your peace of mind. So look for a property with a simple, neat courtyard or floor tiles that are easy to wipe down.

But if you do decide on a property that’s a little higher maintenance – like a large backyard or swimming pool – you can always negotiate with your tenants. For example, your tenant may be willing to pay more rent to cover the cost of a gardener or pool cleaner.

At Turner Real Estate, we offer dedicated and focused buyer agent services for property investors only. We have multiple resources to guide you and help you grow as an investor and competitive fixed price service rates. To find out more about Turner Real Estate’s investor support services, contact us HERE

Article by Emma Slape

Chief Executive Officer
Emma leads the team at Turner Real Estate with energy and passion, committed to the company vision of providing client service that sets the organisation away from the crowd. Actively involved in the day-to-day operations, Emma is always looking for new opportunities to keep evolving the business and setting new… VIEW PROFILE