Debbie Shankar - 22 Nov, 2013

How to Choose the Right Investment Property

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When it comes to finding the ‘right type’ of investment property you need to firstly consider your own personal and financial needs, as well as the time frame that you looking to hold onto each property for. These aspects will then form your investment strategy, which you need to establish before you start buying property so that you can reach your investment goals.

Typical Investment Property Strategies

There are many different types of investment strategies that you will encounter. Some financial experts will recommend using one strategy over another, but in all honesty, the best strategy is the one that suits you and your circumstances, and gives you the best return. Some of the most common investment strategies you’ll encounter are as follows:

Buy and Hold – Buying a portfolio of properties, over time, and holding onto them for at least two market cycles or up to 20-years or more. Most individuals who use this strategy typically buy, and then sell, when they wish to retire. The money they get for their investment properties then funds their retirement.

Buy, Renovate and Hold – Buying property that needs work, then renovating the property and renting it out for a much higher rate. In addition, holding onto the property for at least two market cycles.

Buy, Renovate and Sell – Buying property that needs to be updated, renovating the property, and then selling for a much higher price.

Buy with Other Investors – Buying property with a group of investors. This allows you to pool your resources with far less capital outlay. Typically, you’ll have to agree on a time frame for holding property and how the dividends will be divided.

With a strategy in mind, you then need to consider what type or types of property you’ll invest in. The right type of investment property typically depends on your budget. Let’s look at these in greater detail.

Investment Property Types

You can invest in residential and commercial property, or in a mixture of these. Residential property includes apartments, townhouses, courtyard homes and villas, as well as houses. Commercial refers to business buildings, such as warehouses, shops, offices and stores. The type of property that you buy will mainly depends on your budget, what strategy you elect to use, and your goals.

Factors that Dictate to Buying the Right Investment Property

When it comes to buying an investment property you need to put your business head in gear and leave your heart out of the equation. Your buying an investment property, not a home for you to live in. So you need to look critically at factors that will make your property easy to maintain, give you a high rental return, with very low vacancy rates and strong capital growth. To do this focus on the following factors:

Location – Property situated near the beach, parklands, or water is always popular, along with property that has views.

Amenities – Property that is close to schools, universities, shops, cafes and restaurants, near to employment areas and public transport is more favourable for tenants.

Infrastructure – Consider government and council plans, planned development/s and new transport routes and roads. Always research suburbs and regional locations before you buy an investment property.

Strong Population Growth – Areas where the population is growing are always in need of accommodation. This means that demand for property will be high and this can make for an excellent investment opportunity.

Do you want to know more about buying the right investment property? If you said YES, then it’s time to contact eChoice.

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