7 Key Questions To Ask When Choosing an Investment Property

February 28, 2017 Sam Saggers

Buying an investment property comes with no guarantees, however much of what you achieve is a direct result of the choices you make.

You will enjoy great success as a property investor if you have the right knowledge, and to acquire the right knowledge it helps to simply know what questions to ask.

For example, when determining the potential for growth in a particular marketplace, if you keep in mind the fact that rents drive a market, your questions will be on point, and you will get the answers you need to find a promising investment opportunity. Some good questions to ask include:

1. What is the rental return of the suburb as compared to the return on my investment property?

Your goal as a property investor is to exceed the rental return of the suburb average – that way you know you’re onto a good thing. Also, if there’s a market move you can adjust your rate accordingly.

2. What is the gearing – tax deductions or cash flow of the investment property?

This is really important, because as you go through the suburbs you’ll know affordability versus rental return – it’s a key driver when you’re looking to buy in a top post code.

3. What is your add value rental strategy?

Will the market support furnished rentals? Can you force value through minor renovations? Add a granny flat? There are a number of ways you can add value to an investment property.

investment property

4. What are the vacancy rates in the area?

Finding an area with a strong rental demand and low supply of rentals is a smart way to determine the profit potential of a property.

5. What is the availability of land?

Will there be an oversupply of new land, or is land tight? A lot of the suburbs that investors are looking at have a tight land supply. This is a great question to consider when you’re looking for a suburb to invest in.

6. What are the major projects happening in the area?

Look for an area where there is a lot of investment going on, where there’s investment into infrastructure and other big projects.

Take a look at what retailers are doing. Think of groups like Bunnings, Westfield, Coles or Myers. All of these companies have experts working for them who are making sure that the demographics in a certain area will support their stores, so if a Bunnings is moving to an area, it’s a pretty good sign there’s a threshold of people willing to spend. This is a good sign for an economy, so you need to take a look at where these companies are branching out to.

7. Look at commercial office space in the area.

Is it being expanded or is it contracting? Do they have a tenant or tenants? What do you think that does to business confidence in the area – to the property market? Obviously it works as a damper on the markets and does nothing to improve the confidence of businesses in the region.

commercial office space

Asking these seven key questions when looking at an area to invest in will help you to choose those properties and neighbourhoods which offer the promise of the best yields for your portfolio.

Remember – follow where the workforce goes and you can make some money because that workforce brings money to the area and that money is usually spent on housing.

 

If you want more tips about your Property Investment strategy, book a FREE consultation with one of our expert Investment Coaches to discuss your situation and investing goals.

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