Finding an investment property is hard. You need to look at it unemotionally and purely on the scope of potential and return. Here are the most important things to look at when looking to buy an investment property.
1. Where is it located:
Investment properties are driven by demand and potential. If you buy in an area that has already peaked it is hard to realise further growth on your land unless you make changes to the property itself. Therefore look for areas that have upside, this may include suburbs that will receive new infrastructure soon or other long term developments. Doing a suburb review on Homely can be a great start. Click here to undertake your review.
2. What services are on offer:
Whilst is may not be the prettiest suburb, does it have good local schools? Does it have easily accessible supermarkets and public transport? These are the elements of what will drive prices up further. If the area isn't beautiful, but has strong infrastructure people can generally look past it and buy in there due to the upside it can offer in the future.
3. What else is available in the area:
If there are plenty of properties available with re-development potential you have to ask why this is the case? On the other side, if you are in a suburb that has gentrified and slowly these blocks are starting to get converted to more modern living arrangements, this could show that their is potentially a big upside about to come through. If precedent has been set by council and there is encouragement for redevelopment, then that is a positive. Ensure you check with the council before committing however.
4. What return you will receive:
Finding an area with a strong demand is essential. There is a good chance if you buy an investment property that you will hold it for an extended period of time. Therefore you will need to receive a return from leasing it out. It is essential that you have an agent investigate what the return could be, and inform you what other rentals in the area are getting at the time you look to invest.
5. What is the target audience currently and in the future:
It is important you look at the demographic that lives there and if this will remain the same. If in the past it has been a very traditional family set up, but in the last ten years it has been popular for immigrants and new comers to the area you need to factor that in. You need to buy the investment property for who will live there in 5-10 years, not for who currently lives there. Does it cater to their needs and does it serve the new demographic moving in?
Overall when looking to buy an investment property, your best bet is to speak to an agent. You can ask an agent questions about that local area here. Doing your research before can be the difference between buying a great development block vs a dud!