So you’ve decided to take the plunge and buy your first investment property. Or maybe you’re looking to add another property to your existing portfolio? That’s the easy bit - now comes the tricky part. What type of property should you buy to get the maximum yield from your investment?
Location, location, location... it may be a cliché, but location is still the most important consideration when you’re contemplating buying an investment property. Try to think like a potential tenant. What’s your market? Let's take the young family - they want to be close to amenities and near to public transport. They also want shops and good local playgroups, schools, parks and the beach. Cosy evenings at home in front of the TV are bliss, but being next door to a houseful of noisy youngsters not so much. So, think like your target tenants when you’re buying.
Properties that are branded as having “investment potential” usually need a lot of work doing to them. For a start they are likely to be in need of a full interior renovation and there could be a substantial amount of deferred maintanence or hidden structural defects. If you don't mind spending your money and time getting the property up to standard - go for it, you could pick up a real bargain. If DIY and hours of hard labour don't sound like your cup of tea then avoid these properties like the plague!
The rules rarely change here; don’t go for fads. We'd all love a nice bathroom with double sinks and heated tile flooring. Tenants will rarely turn down these types of gadgets but they also won’t pay more for them, and if they go wrong, it’s the property owner who is responsible for picking up the bill. Instead, go for solid decent locations and property that will appeal to the widest range of tenants. If possible, try to buy something near public transport. If it’s not in good condition, give it a suitable makeover before letting – you won’t regret it and it will be sure to draw in a plentiful supply of prospective high-quality tenants.
Get unbiased advice from a property management company that only focuses on lettings. It's in everyone's best interests if you buy property that can be let quickly at the highest rent and for the longest term. They know what is in demand, both in terms of property and location. This is vital to avoid costly mistakes.