Considering an investment property? A building broker's top tips.
Article originally published on The Property Investor Magazine
We know there are many benefits to investing in property – less volatility, fixed returns, tax advantages, capital gains and equity growth. Investing in a new build also offers some additional advantages worth considering. Here are my top tips if you’re contemplating an investment property:
1. Don’t just grab the first thing
The current property and land market is like a feeding frenzy! However, as we know, the real estate market always moves in cycles and there will be a downward trend at some point, so buying on a train line or a main road may not be the best investment. Remember, in a market downturn, homes with problems will take longer to sell.
2. Buy off the plan
This is a great way to get more out of your investment dollar as you only pay stamp duty on the value of the land, not on the total purchase. That saving can be used to upgrade the kitchen or bathrooms which can maximise the appeal of your property to renters.
3. Minimise the maintenance
Building an investment home saves you money on all those maintenance costs – you don’t have to worry about buying a new hot water system or new oven to make it liveable as can often be the case with older properties. Plus, most of the items in your new property will be covered by warranties.
4. Remember the old adage – location, location, location
Look for areas with close proximity to major roadways. For example, in the Hunter region, Greta has taken off because it is near the Hunter Expressway so miners are loving the area as they can have a quick 15-minute commute to the mine. Likewise, don’t underestimate the changes we’re seeing in the post-COVID-19 era where people can work from anywhere. If you had planned to invest in a major city, why not widen the net and consider regional areas.
5. Be community minded
Consider the available amenities and your potential rental market. Having schools and shopping centres nearby appeals to most people, but especially retail workers and teachers who prefer to live close by. Likewise with hospitals – these properties are appealing to tenants, but also those working in the health system.
6. Size does matter
I often recommend investing in a 4-bedroom home with separate living area – this opens up a wider demographic of potential tenants, meaning less time the property is likely to be vacant.
7. Fixed price means faster returns
Select a fixed priced and turn-key builder for a smart investment. This gives you assurance that the contract price will not change and everything will be done for you – no extra trades to organise for landscaping, window coverings, air-conditioning and so on. This means your tenants are in quickly and you’re achieving a return as soon as possible.
Whatever you decide, remember that doing your research will mitigate risks and help you reap the rewards!
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Happy Building!
