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What should you look for in an investment property?

28 Aug 13

Purchasing an investment property can be a difficult exercise, with a slew of financial and market considerations to take into account.

For beginners especially, it can be hard to judge whether you will receive sufficient returns on your investment.

However, historically low interest rates have lowered the cost of borrowing and many more people are gaining the confidence to jump into the property market.

REISA has some real estate tips to offer those looking to join in - here are some points to consider before choosing a property to invest in.

The neighbourhood

The immediate surroundings of the property are obviously one of the most important factors to look at before buying a property.

In fact, the Mortgage Choice 2013 First Time Property Investors Survey found that being in the right suburb and street was the most important consideration for first time property investors.

The type of neighbourhood will determine which types of tenants are likely to rent your property.

Is it a quiet suburb made up mostly of the elderly? Or a noisy university town?

This will also determine vacancy rates, according to Investopedia.

Proximity to amenities

You never know exactly what each individual tenant will want, so make sure the property is close to a range of amenities and facilities.

Tenants with children will obviously want to be located near schools, while entertainment and leisure facilities such as gyms and cinemas are likely to be popular with most.

Even new investors are well aware of this - the Mortgage Choice survey revealed that 55 per cent of first time investors wanted their property to be close to amenities and entertainment.

Forecasted growth

Your property is by definition an investment, so you will want to make sure it brings the maximum returns.

It therefore pays to do some research on the area and its trends to make sure your property will increase in value over the years, taking into account factors such as tenant demand.

In fact, the tenant demand and population growth of a property's area were found to be two of the most important factors for respondents of Mortgage Choice's survey.