Many investors make purchasing their first investment property harder for themselves than they need to by being unnecessarily emotional about their purchases. It is not uncommon for novice investors to turn down a property with terrific investment potential and strong rental demand just because they themselves wouldn’t want to live in it. Some end up buying what they consider to be a ‘nicer’ property, only to find that the tenants have different priorities and will choose more basic accommodation in order to be, say, closer to amenities or to save on rent.
Remember that many renters need to use public transport and that the proximity of shops, schools and transport may weigh more heavily with prospective tenants than a flash kitchen. Not only that, if you buy something for which you need to charge above median rent, the property could sit vacant as tenants are often saving for a home of their own and would rather economise now for benefits further down the track.
The strongest demand for both re-sale and rental are properties advertised around the median price in any marketplace or location. Those who choose to invest in the luxury end of the market are usually the first to be hit by an economic downturn while median priced properties are not as badly affected and usually give their owners the best long-term return.
In a recent article, property author Monique Wakelin agrees with the sentiment that your opinion of the investment property doesn’t matter: “When buying a home, the only opinion that matters about its features, location or accommodation is your own. For an investment property, the equation is exactly the opposite.
Property investment is about finding a property in high demand and short supply that will go up in value substantially over time,” she says.
Before you buy an investment property it might be worthwhile to go through her checklist of simple do’s and don’ts:
These questions will help you separate your emotional motivation from your financial motivation and help you determine whether the property you’re thinking of buying will bring you the financial benefits you’re looking for.
With both property management and property sales, we know both sales and rental market well and are in a great position to give you advice on purchasing investment properties in the Macarthur and Liverpool areas.
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