Buying an investment property comes with a lot of questions, and rightly so.
Where should you buy? What kind of property should it be?
But there are some things every investment property needs if it’s going to achieve the capital value growth that you want it to.
These are your must-haves.
We’ve all seen the reports about single car spaces in prime Sydney locales fetching hundreds of thousands of dollars.
There’s a reason for it: every year there are more potential residents and an ever-decreasing amount of space in which to park in our capital cities.
Wakelin Property Advisory associate director Jarrod McCabe says it’s not enough for your property to have access to a general parking area – the car space must be assigned specifically to your property.
“It must have a car space and it needs to be an allocated car space,” he says.
The equation for capital growth in investment properties is simple: if there’s a lot of people who want a particular type of property but there’s not many of those properties available, you’ve got a recipe for success.
McCabe says investment-grade properties must have a level of scarcity that means they’ll always be in demand.
“Something that’s got some scarcity value to it and not something that’s been replicated time and time again, with more and more of the same things being built,” he says.
“That doesn’t necessarily mean that it’s an unusual property. Scarce properties are quite often fairly conventional, but it’s something that is in limited supply in the marketplace and there are more buyers around for that type of property.”
“In the apartment market it’s more of your older style, one or two-bedroom properties, something generally constructed between the 1930s and 1970s in a boutique-type block. Nothing with a pool or a lift or a gym or anything like that in it, so it keeps your owners’ corporation fees down.”
Buying a property in the best possible suburb, or in a suburb that you believe is about to boom, is something of a no-brainer.
But look harder within those suburbs and you’ll discover that some pockets or streets are much better for investment than others.
“Being in a blue chip suburb is really important, but not just being in any part of that suburb. You then look for a good street, and that’s not just in terms of its geographical location but also its consistency. The architectural style of the properties within that street are really important to take into account.”
McCabe suggests looking at the other properties in the street for things that could potentially affect price. If zoning will allow a large development to be built next door, that will affect your property’s potential growth.
“What are the surrounding uses? Are there any uses for a specific property nearby that might impact on your property’s livability? That could certainly impact on desirability,” he says.
While you can always add value to a property by renovating or upgrading certain parts of it, McCabe says it’s important that you select a property that possesses all the right underlying attributes.
“The important thing to take into account when you’re buying a property is to get the things about that property right that you cannot change, for example the position within the street and the position within a block.”
McCabe says a good layout or floor plan will appeal to more renters and more buyers when it comes time to sell, so pinpoint those features that will appeal to the greatest number of demographics and potential buyers, and you’ll be onto a winner.
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