One question we’re often asked by potential investors is which are the best suburbs to buy an investment property in. We could start listing some popular suburbs around Newcastle and Cardiff, or some of the areas being developed, however, we believe people live anywhere and there are always people who need to rent.
Potential investors very often overthink it. They are always looking for the right suburb and the right house – two years on, they’re still looking for the right suburb and the right house – meanwhile the market has moved on by 5%.
We think the key to a good investment property is to buy a good product. You don’t have to love the property as you’re not the one going to live in it, but you should like it; not many people want to live in a dark and dingy property overlooking a train track even if it is in a trendy area.
Here are our tip of what we deem makes a good product:
Easy to Maintain
Whether you’re using a property manager or managing it yourself, if the property has lots of maintenance issues it will cost you not just financially. Sorting maintenance is a drain on your time and can be stressful.
A structurally sound property with a small paved garden/yard, quality plumbing and air-conditioning/heating will be easier to maintain than a rambling old house with an overgrown garden.
Identify potential problems before you purchase a property. If they are relatively easy to rectify, and add value to the property, it might be worth investing in.
Look for properties that will appeal to more than one segment of the rental market – singles, couples, young families or retirees.
Appealing features for many prospective tenants include off-road or secure parking, and proximity to shops, schools and public transport. A good layout is also attractive; people don’t like walking through bedrooms to get to the bathroom.
Unit or House
Both have different benefits and it basically comes down to your budget. Units are often cheaper and easier to maintain than houses, but there are other costs associated with units such as body corporate fees.
There is sometimes the scope for adding value to houses with further renovations and the extra room houses offer make them more appealing to family tenants.
Where to Buy
The reasons why some neighbourhoods are more desirable than others vary immensely and potential tenants will have different tick boxes. For instance, a family may be more interested in living in an area with desirable schools, while a working professional may be more interested in what entertainment is in the area and access to public transport.
Ultimately, most people want to live in a safe area with a low crime rate.
It’s always advisable to see if an area has any planned developments or zoning changes; these may affect property values and attractiveness to potential tenants in the future. For instance, an area where high growth is expected could offer the potential for better capital gains.
Our advice is, speak to finance professionals, know your budget, do your research, and make an investor property checklist. If a property comes on the market, weigh up the pros and cons – if it has more pros than cons, view it and if you like it, then consider putting an offer in.
If you have any queries or would like to know more about buying investment properties or our property management services our experienced team will be happy to help out.