5 factors that could impact your investment

It’s easy to fall in love with a property, but buying with your heart can be a disaster when investing in property. Property Power Partners analyst John Lindeman highlights five questions you should answer ‘yes’ to before signing any paperwork.

1. Are your investment goals clear?

If you purchase a property without clear investment goals, then you’re likely to lose money.

The solution: Be clear about what you want, says Lindeman – whether that’s renovating to sell, buying for capital growth or generating rental cash flow. Knowing this will help you find the right property for your strategy.

2. Can you rent the property?

No matter how attractive the property, it will soon become an expensive albatross around your neck if it stays empty.

The solution: Do your research.

“Consult property managers about rental demand and tenants in the suburb. If several have waiting lists for properties, then it’s a good sign,” says Lindeman. “Also, check rental vacancies (by searching Domain for current rentals) and compare it with the total number of rental properties in the suburb (available from the Australian Bureau of Statistics).”

If the ratio is less than five per cent, it’s a good rental market, says Lindeman.

3. Are you in the right street?

Not all streets are equal, and some parts of a suburb are more desirable than others. Make sure your property isn’t in the wrong part of town.

The solution: Ensure the location is desirable for tenants and buyers. If you’re likely to rent to students, the property should be close to public transport and educational establishments. In the case of families, consider proximity to schools.

4. Are you sure you’re not overpaying?

Auctions can be stressful and you can easily end up paying too much for a property if you’re unprepared.

The solution: Even more research. Lindeman recommends sourcing suburb sales reports, such as APM’s Home Price Guide reports, and the number of houses for sale by conducting a simple Domain search.

If there are fewer properties for sale than the monthly average, the market is likely to be ‘hot’. Not only are you liable to overpay, but future capital growth is likely to be limited, too.

5. Is the property structurally and legally sound?

Your chosen property might tick all the boxes, but structural or legal issues could turn it into a money sink.

The solution: Carry out inspections before you finalise the sale. A building inspection will ensure the property is structurally sound, while enquiries with the local council will reveal any legal hindrances that could curtail renovation or development plans.

Investing in property is about thorough research and making dispassionate decisions. Asking these five simple questions could save you from making a costly mistake.

Sourced from domain.com.au

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