Buying an investment property can be a clever financial decision only when you do it right. Do it smartly, and you will surely get a smart return on it ultimately. To achieve this goal, you need to think strategically and evaluate essential factors that may have impact on your decision. You must think out of the box when choosing and buying your investment property.
Here are the factors that you must keep in mind before making a final decision to minimise the chances of failure and ensure sound returns.
1) Capital Growth
First and foremost, you must check and assess the location where the property is located. How convenient is the location with respect to basic amenities – School, Station, Shopping (SSS). As an avid investor, your research should include the government’s vision for the location – planned expenditure for the growth of the location. Whether there is a proposed train station, metro, motorway upgrade or an upcoming school.
You must consider projected population growth in the location. Demand is directly proportional to Selling Price. For locations with planned population growth, there is a strong possibility for price rise and thus better ROI. Private businesses play an important part in determining the capital growth of the location. With private business comes jobs and thus higher demand.
2) Rental Demand & Yield
A stable rental demand and yield will ensure that your property is always leased out and in most times that the rent takes care of the mortgage payments. This ensures that you are never out-of-pocket on the investment property and gives you an edge of not ending up with a desperate sale.
3) Age of The Property
Another essential element that may have an effect on the cost equation and you wouldn’t want to avoid it surely. Investment properties classically involve ongoing expenses – for instance, maintenance costs, that may burden your pocket in future. So, you want to make sure that the property you are thinking to buy shouldn’t be a drain on your finances. What you need to consider is:
- Older properties often need consistent maintenance. However, it mostly depends on the condition of the properties. Do check and assess everything from the fixtures to the structure to the fittings.
- It is wise to get professional building and pest inspections done before you make an ultimate buying decision. If the property finds minor fix-ups or renovation that is fine. However, if it needs major renovation or remodelling then it is not worth an investment.
- Another factor that is associated with the age of the property and might impact your finances in future is property’s depreciation schedule. It is the calculation of how much there are chances that the value of the property and its content – including carpet, white goods and more – would lessen in future, based on which you may be able to claim as tax deduction.
4) Property Features
Although, you may not be deciding on living this property, however someone else will be. So must consider elements that can help increase its rental value. It includes features and elements like garage, home office space or study room, an aesthetic looking launch or more. The design and layout of the property makes a great difference when people look to buy properties.
Final Verdict
Buying an investment property is a huge investment to make. So you must keep in mind various essential factors – as mentioned above, before making a final decision. You may decide to carry out all this research yourself or speak to one of the friendly salespersons of Home Strikers to take you through all these research modules.
At Home Strikers, we present to you the locations with strong fundamentals for growth. This is based on our extensive research on multiple factors – infrastructure commitment, government spending, projected population growth, demand & supply in the micro-market, private investment commitment by the large players and demographics of the suburb. We manage a diverse portfolio of real estate services to help our clients’ get their dream home that is not only modern and luxurious but also presents a decent return on investment.
