Choosing a high performance investment property

Choosing a high performance investment property

With Melbourne’s property market experiencing significantly softer conditions, now is the time for investors to capitalise on lower prices. Investing in property is a big step towards securing your financial future. Though you’ll be inundated with advice from well meaning friends, relatives and colleagues it’s vital to remember that every investor’s situation is unique, and that includes a range of factors such as budget, suburb preference and reasons for investing. We sometimes see people focus too much on perceived price rather than real value and long-term potential. Property should be viewed as a five, or preferably ten year investment.

When you’re getting started, it’s important that you research the capital growth history of the suburbs you’re interested in and look at the potential rental income before deciding on a property. The common measures of property pricing are median pricing and median rental which has an averaging effect on these respective values. Your aim as a property investor should be to outperform the average growth and maximise returns. While location is critical, it shouldn’t be the only factor influencing your purchase decision. Other key factors include aspect, potential to improve, architecture, building integrity, and land as a component of price. These are the key characteristics that contribute to capital growth.

It’s important to choose a property in a suburb with high rental appeal. This means making sure the property is located close to schools, shops, public transport and parks. Remember, this is not your personal dream home! You need to look for features that are desirable to your rental market, not necessarily yourself. As a general rule, stay away from properties that are adjacent to areas with an over-supply of rentals – you will only be competing with them for tenants which could drive rental returns down. If the property has been rented before, check the rental record. A competent property manager can help you understand what rent should be expected.

Maximising your investment property in the current rental market our property managers handle hundreds of investment properties on behalf of landlords every day. Ensuring long tenancies and minimising any vacancy periods is key to maximising your property’s performance.

Based on current rental market conditions, here are our top tips for landlords to ensure long tenancies and minimal vacancies:

1. Get an accurate assessment of your property’s market rental value

2. Though it seems counter-intuitive, don’t insist on a second fixed term tenancy when the original lease runs its course

3. Plan and negotiate small rental increases rather than slugging tenants with one big increase

4. If you do lose a tenant, make sure your rent is seasonally adjusted – advertising peak rental rates in the middle of winter will leave your property vacant for longer.

For tailored advice on your property portfolio, or to speak with one of our experienced property managers, call us today on 9827 3355.