Tips for buying investment properties

A common question I get asked by investors all the time is: “How do I recognise a good investment property?” Here’s my 9 point checklist to help you.

Reliable income – the property should produce enough income to cover your expenses and loan repayments and not leave you too much out of pocket each month. Your expenses include council rates, water rates, strata levies, insurance premiums, repairs and maintenance, and agent management fees. Also, keep a little bit extra up your sleeve just in case something goes wrong.

History of strong capital growth – check that the area has a proven track record of capital growth over time.

Low vacancy rate – you need to have plenty of tenants wanting to rent your property. Being located near public transport, shopping centres, medical services and schools are important factors.

High demand property – it should be a property that will be easy to sell. This ensures you can get out quickly if you need money to take advantage of other opportunities. Again, location is important.

Priced at or below market value – research recent sales to ensure you’re not paying above market price. There’s plenty of information available online and through real estate agents to assist you. Keep a close eye on the market before you buy.

Building and pest inspections – make sure there are no major defects that will affect its value or add to your expenses unnecessarily.

Easy to manage – properties that are high maintenance are going to be a drain on your time, energy and finances.

Significant land component – properties with a high land component are more likely to grow in value. Remember that while buildings depreciate in value, land grows in value.

Development potential – properties where there is potential to add value with improvements or renovations offer investors opportunities to grow their income and capital.

Chris Hopkins is Principal and Licensee at Raine & Horne Hornsby. He has over 20 years’ experience in sales, sales management, and sales training to major franchise networks. He now runs a dynamic team serving the local community. Formed in 1883, Raine & Horne is one of the oldest privately owned companies in the Southern Hemisphere and is currently in its fourth generation of family ownership. Chris and Susie Hopkins have owned the Hornsby franchise since 2016.

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