In recent months, interest rates have been rising. On the other hand, real estate costs have been declining in several markets.
That suggests that aspiring real estate investors may find some excellent opportunities out there. Finding the ideal house in the ideal location is everything.
Here are some qualities to look for in an investment property.
Potential for capital gains
The ideal property is one that is anticipated to appreciate in value over time. Yet how?
Look for regions where the economy is expanding. Jobs are produced through economic growth. Jobs attract people to a location. The need for housing increases as the population grows. Increased demand may also result in capital growth.
Additionally, you should pick a home that is close to services like hospitals, stores, and transportation. Examine the school zoning as well, as this can be a major selling point for families.
Rental return
The rental yield measures the revenue return in relation to the expenses associated with owning an investment property. It may be calculated as a gross or nett figure and is frequently reported as a percentage.
Investors may find properties with high rental yields to be appealing because they often indicate a consistent income flow.
Low vacancy rates
You can determine the percentage of vacant rental properties by looking at the rental vacancy rate. For instance, a 4% vacancy rate in a suburb indicates that 4% of the rental properties is unoccupied.
Higher vacancy rates could indicate that there are more rental properties than there are tenants, which could cause your property to remain empty for longer and command a lower rental fee.
Lower vacancy rates may indicate a competitive market, more renters vying for the same properties, and possibly higher rent.
Proposed planning changes
It’s crucial to look into any proposed planning changes that can have an impact on your investment while looking into a suburb.
Let’s say that zoning regulations and density restrictions are altered, allowing a region to be overrun with townhouses and apartments. The additional housing supply can cause rents and property values to decline.
Features and lifestyle factors
Consider the things that prospective tenants would find appealing. It might be an additional restroom. Storage room or garage.
Consider the appeal of a suburban way of life as well. Are there any parks in the area? A beach that is in walking distance? Or entertainment venues? All of these features can increase a rental property’s appeal to potential tenants.
Low maintenance costs
You don’t want to be paying out a lot of money for maintenance and repairs that reduce your potential for profit. Instead, choose a low-maintenance property.
An older home could need more maintenance than a home that was recently built. Consider ageing hot water systems, outdated electrical or plumbing systems.
Additionally, a larger-sized house may require more landscape upkeep, which your prospective tenants may not have the time for.
Ways to add value
Find properties where you can readily increase value. At some point, you might be able to give the property a facelift with a new coat of paint or a cosmetic makeover, for example.
Simple renovations can hasten capital growth and increase rental income.
Ready to get started?
Investing in real estate might be a smart method to increase your wealth. However, it’s a good idea to get independent financial advice from a qualified advisor and/or your tax accountant before getting started.
If you do decide it’s the right move for you, we can support you with:
• Free property reports to guide you in your property hunt
• Tips on how to budget for an investment property
• Pre-approval on your investment loan
• The loan application and approval process
• Finance to renovate your investment property
• Advice about your investment loan in the future.
We’re here to help, so please get in touch.