- Posted 13 Oct
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Whether you are purchasing a home as a primary residence or an investment property, there are some common elements most people look for. Location, the number of bedrooms and amount of living space, parking and transportation options, and outdoor space are all popular considerations.
When purchasing an investment property, you’ll also want consider your investment goals. Are you hoping to renovate a property and sell it quickly at a higher price, or are you looking for properties that will provide long-term capital appreciation and income? Here are some factors to consider when deciding on your next investment property:
In addition to making mortgage payments, you need to consider other operating and maintenance costs for your investment home. Properties built after 2005 are given a star rating based on a ten point system. Any new building is required to have a rating of at least six stars, but a property with a rating of nine or ten will be significantly cheaper to operate over the long run.
Other items that affect operating costs include the plumbing, heating, and cooling systems. Have an inspector report on the condition of pipes and taps. Make sure that heating and cooling systems are modern and efficient. Heat pumps and reverse cycle air conditioners are money saving options that will last a long time and entice tenants.
Neighbourhood growth potential
Buyers looking for a primary residence are drawn to established neighbourhoods with transportation and good schools. These things are important to renters too, but it makes sense to choose investment properties that are located in high growth areas. These areas may be changing rapidly, but there is every indication that the neighbourhood is improving and rental demand will be increasing.
Different property types perform better in different areas, depending on lifestyle factors and neighbourhood demographics. In a city centre, investing in small apartment units makes sense, as they appeal to young people who don’t have children yet and aren’t ready to buy a home. In more suburban areas, it may make more sense to invest in a duplex or a three-bedroom home. A little research will help you find out more about area demographics and about the types of property that are most common in the region.
Take a practical view
The best piece of advice for investors is to look at potential properties logically, not emotionally. Remind yourself that you aren’t going to live there, so a stylish interior or great view shouldn’t sway your choice. Instead, do your research, look at the numbers including the affordability of the unit, and measure the upward potential of the neighbourhood. No investment is without risks, but if you do the maths carefully, you are likely to end up with a property that will provide rental returns and increase in value over time.
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