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How to know if the property you’re buying is a good investment.

Many would-be investors hesitate on making their first purchase out of an abundance of fear. Buying a investment property can certainly feel overwhelming, but it doesn’t have to! Having the right team and guidance is essential to your success in the property market, and after many years of real estate investing the team here are Simply Property have identified and distilled the key criteria that make for a good investment.  

Having a set criteria in advance takes the guess work and fear out of the purchase process. Simply Property’s criteria is simple and effective; we target properties that have a minimum of 20 years depreciation remaining to ensure the additional tax benefits that will assist with cashflow. We also aim to minimise the risk associated with construction by purchasing properties that can generate an income from day one, in high growth areas.  

As we delve deeper into the components of what makes a good investment, it’s important to keep in mind that individual circumstances and market conditions may affect some of these parameters. A property that’s hard to find in one market may be outright impossible to find in another, so knowing when to apply flexibility in your approach is important skill to have. 

Ideally, a savvy investor will want to ensure that the investment property they’re buying is at or below its intrinsic value. Generally, you won’t make a lot of money by paying a premium on your investments. This is why we avoid off-the-plan properties, as the purchase cost is often inflated by high sales commissions and developer bonuses. 

You will also want to ensure that the property has a high land to asset value ratio. In other words, we want the land that the property sits on to be the most valuable component of the purchase. This is the most important factor in determining your investment’s capital growth over time, as structures will come and go but the land they sit upon will generally retain and increase in value. 

To give your investment the best shot at appreciating in value it’s vital to select a location on a strong growth trajectory. Neighbourhoods with the economic wind in their sails tend to stay on that course for years at a time, leading to permanent increases in capital growth of properties in the area.  As the local market heats up, new residents are attracted to the area and local businesses thrive in catering to their needs. In addition to the capital gains increases, areas on this trajectory offer lifestyle benefits that make the neighbourhood more attractive to renters, too, allowing you to charge a premium on your rents. 

In an ideal world it would be great to control every aspect of your investment, but alas, this is rarely – if ever – the case! There are, however, some aspects that you can control from the outset. Buying an investment property in need of renovations or redevelopments allows you to add value or less overnight. The biggest bang for your investment buck will come from adding new rooms to the property, renovating kitchens, and improving landscaping. If you’re on a budget, even just a light refresh with a new coat of paint and some new carpet can work wonders. 

Knowing your criteria before buying an investment property can take a lot of the stress and fear out of the process. When you know what you’re looking for, and that the list of attributes corresponds with success in investing, you can feel confident that you’re making a wise and informed decision. That’s why here at Simply Property we rely on our years of experience in property investing to develop custom-tailored strategies for our clients based on their goals and needs. When you work with us, you have the benefit of our expertise and proven track record of success. So what are you waiting for? Get in touch with us today by calling 07 5570 2579, or email us at contact@simpleproperty.au. Otherwise, visit our website to learn more about our business and the services we have to offer.