With interest rates currently hovering around record lows, now is a great time to be a property investor.
Done well, property investment can help borrowers set themselves up financially for the future and help them future proof their wealth.
But while property investment is a sound wealth creation tool, it is important for potential investors to distinguish the difference in thinking between purchasing an investment property and a home in which they would occupy.
When people purchase the home of their dreams they look for things like: ‘Will the location fit my lifestyle? Is the size of the house suited to my needs? Do I like the interior decorating?’ - Things that are practical and will make them feel comfortable living in the house.
However, when purchasing an investment property, borrowers need to be looking at different aspects, such as ‘Is the area going to achieve good capital growth? Is the demand for rental properties strong in the area? Will the house require a lot of maintenance?’ - Generally they are things that indicate whether the investment will produce a positive return and be relatively easy to manage.
Creating wealth through investment is not a new strategy and much homework needs to be done.
Here are a few key factors locals should consider when looking to buy an investment property:
- Suburb reputation;
- Suburb location e.g. close to the city, waterways, parks;
- Proximity to transport;
- Proximity to shops, cafes and other entertainment;
- Proximity to child minding facilities, schools, or other educations institutions;
- How functional it is in terms of space;
- What tenants it will suit;
- If it needs any repairs or renovations now or in future, for tenant’s comfort and for resale;
- If it is a unit, the trustworthiness of strata and the sinking fund level;
- The type of neighbours;
- Infrastructure planned for the area; and
- If the location is suitable to making regular inspections.
As with all investment strategies, a long-term approach should be taken when purchasing an investment property.