Top tips for choosing an investment property

It's easy to see why property experts advise buying an investment with your head and not your heart. You won't be living in the property in the long term, so hard to pin down features like charm and character shouldn't muddle the decision-making process.

But what should you look for in an investment property? There's a little bit more to it than just finding something neat and tidy and off the main road.

Do your research

Looking into vacancy rates, sales prices and rental rates can be a good place to start to narrow down a location, and QBANK's free Property Report will help you get across:

  • property details
  • estimated value
  • sales and rental history
  • other properties listed for sale in the area
  • suburb insights.

It's also worth looking at housing demand, and past and projected population growth. Naturally, properties close to the CBD are always in high demand. According to Census data, the population in the greater Brisbane area grew 23.7% between 2006 and 2016, compared to 18.5% across the rest of Queensland.

But don’t rule out outer suburbs and regional centres altogether. Lower sale prices in these areas may deliver better rental yield compared to properties in popular, inner-city suburbs where the mortgage will be a lot bigger.

Ideally, try to get into an area before demand peaks. Look out for:

  • new developments and land releases
  • planned improvements to infrastructure and transport
  • regions with changing population demographics.

House or apartment?

If you’re aiming for capital growth, investing in a house is the best option, but not always. Changing demographics, particularly in city suburbs, are generating more demand for apartment dwellings. Apartments may give better rental yield and need less maintenance, but you'll have to factor in strata or body corporate fees.

Go with what you know

You don't necessarily need to live close to the investment property, but it helps to be familiar with the area. Narrowing down to a preferred suburb is a great start, but there will be key pockets within suburbs that are in high demand. Talking to local real estate agents is an excellent way to identify these areas, and can help you weigh up a higher property cost against a greater likelihood of renting the property quickly and keeping it occupied.

Put yourself in the tenant's shoes

What kind of features would you look for in a rental property? Most renters want a property that is clean, functional and close to amenities like shops and public transport. Talking to local agents or looking at rental ads can help you identify other features your target market is after, like:

  • extra toilets or bathrooms
  • heating/cooling systems
  • security
  • storage space
  • recently renovated kitchens and bathrooms
  • backyards, balconies and courtyards
  • off-street parking.

If you’re aiming for a family-friendly suburb, renters are likely to pay more for a property with a backyard, on a quiet street and close to schools, shops and a park.

If there’s a university nearby, share house students need lots of bedrooms, comfortable communal areas and easy access to public transport. And you’ll want low-maintenance simplicity as your tenants may change regularly.

Longer term maintenance and value

You might be tempted to pay a lower sale price for an investment property that's in a slightly run-down condition.

You won't be living there, but you will be responsible for repairs and maintenance, so it's worth considering what the short- and long-term maintenance costs might be.

Look into potential capital growth on the property in case you want to sell, and if there’s any tax implications.

Ready to research?

QBANK's Home Loan Specialists can help. Call 13 77 28 or access a free QBANK Property Report for a smart guide to the housing market.

Posted in

Investment

More articles

QBANK Maintains Ultracompetitive Home Loan Rates

Following the decision by the Reserve Bank to reduce the official cash rate for the second time in as many months, QBANK will reduce interest rates on its already very competitive variable rate home loan products for owner occupiers and investors by 0.20% per annum. Mortgage secured overdraft rates will also be reduced by 0.20% per annum.

Read article

Choosing a bank account for your child

If you want to teach your younger children about money, helping them set up their own bank account is a great start.

Read article

9 questions for your agent before you buy property

Buying a house is the biggest investment most of us will ever make. Don’t be afraid to ask your agent the hard questions before you sign up for a new home or investment property. 

Read article