When selecting an investment property, the goal is to establish strong capital growth, a decent rental yield, and the ability for the property to appeal to a constant, good tenant.
Therefore, once the macro fundamentals bring you to an appropriate suburb, the selection of certain micro fundamentals will significantly de-risk the investment and assist in its desirability to renters and future owners.
Here are my 6 crucial MUSTS when making your selection.
1. Location.
Location is probably one of the most commonly used phrase in property, but getting the suburb right is not enough. The location within that suburb is critical.
For example:
Avoiding properties located adjacent to main roads. It's vital to avoid annoying sounds such as those caused by traffic. You would be amazed how quickly a tenant can be annoyed by things like heavy traffic, bus stops or deceleration/acceleration zones like speed humps and traffic lights
Avoiding nasty smells. It sounds obvious however, it should always be noted that no one wants to live near a takeaway shop's extraction chimney or equally frustrating smells.
Unsightly views can also affect a dwellings desirability. Imagine having someone staring into your bathroom or even being completely blocked from light and airflow. Understanding an aspect or what can destroy it going forward by knowing what’s coming, is again an important part of a property’s location.
Being close to shops, parks, stations, schools, etc are desirable but too close or too far can also come with diminishing desirability.
2. The Right Dwelling For The Right Market.
The appropriate dwelling to the emerging demographic must be considered.
Some questions to ask include:
What are the emerging markets of a suburb shaping up to be?
Is it a family orientated suburb that would suit a house or do the stats show smaller time-poor families of professionals perhaps a townhouse may be more appropriate?
Is it a suburb of single dwellers or shared living whereby a unit may be more appropriate?
3. Floor Plan
Analysing a floor plan is very important to accommodate the points mentioned in the above criteria.
What is the layout?
If you are trying to appeal to two professionals, having the rooms at opposite ends of the dwelling with two bathrooms is important, whereas a young family with a single child would probably prefer adjourning rooms and prefer a bath being available.
You must also assess what may be wasted space such as long passages or unusable nooks and crannies, after all, you are paying a price per sqm… it should be usable and functional…a good use of space.
4. The Team.
Every successful investor sources a strong team, consisting of a vendor, architect, and builder, all of whom are experienced and good at what they do.
It’s great to work with a team that wants to leave a legacy and have an excellent track record.
Far too many investors get this one wrong being blinded by the hype and excellent marketing material.
Beautiful renders are easy to create but to have the build resemble that render are few and far between. A team wanting to leave a legacy, one who wants their family to walk past that site.
5. Quality.
As an investment the balance between ‘undercooking' and ‘overcooking’ the quality is very important. Sadly most will try and get away with as little as possible but some also overextend, thereby, inflating a price beyond what is needed. Understanding what is just right comes with experience.
6. Price.
The buck usually ends here but imperative to focus on value. Being able to negotiate the best price and value is something we at Meridian Australia have a distinct advantage with.
First, with our experience, we know precisely what the selling price should be, and being able to use our vast network, allows us to negotiate better value for a better price by being able to provide multiple purchasers.
No one wants to pay too much so working with someone who can negotiate the best price, or be able to negotiate great incentives at the pre-sale stage is putting investors in a very strong position by getting to choose first and not overpaying.
Warren Jacobs - Senior Property Investment Consultant at Meridian Australia
P: (02) 9939 3249
Disclaimer: When considering purchasing a property, it's always prudent to seek the advice of an appropriately qualified professional to determine which strategy is most appropriate for your individual circumstance.