As many Australians have come to the realisation that their annual overseas holiday might be on hold, more and more people are looking at investing their savings elsewhere. With interest rates at a record low, there is a great opportunity to enter the property market and make your investment work for you. Not only can your investment return a sturdy secondary income, but there may also be tax benefits if you select the right property.
In saying this, before diving into the depths of property investment there are three main levels to consider for your best chance of great rental income. Let’s explore these.
Supply & Demand
Let’s start with the bigger picture and take a look at the stats and facts, all of which are within your reach via the Australian Bureau of Statistics, which you should keep in mind when looking at areas to invest from a regional level.
The first point of call is renter proportion and vacancy rates. Look for areas that have a high renter proportion. This tells us that there is a renter demographic in this area, and a low vacancy rate, which is a great indicator that there is a real demand for rental properties. Taking a look at the 12-month rolling average search interest rates will also give you a good indication of where people are looking for rental properties.
Level of Amenity
Once you have decided on the area you are going to focus on for your investment property search, it’s time to take a closer look at the amenities of the suburb and surrounding area. As a rule, suburbs that tick more of the amenities boxes tend to have lower vacancy rates.
The key amenities to look for that are generally in high demand are schools, public transport, cafes and restaurants, as well as everyday retail such as grocery stores. The importance of each amenity type will differ depending on the demographic of the property type. For example, nearby schools are relevant to those who rent family homes but less important to apartment tenants. Close proximity to public transport is an important factor in most cases and you will notice that these suburbs have lower vacancy rates than suburbs without good public transport.
Future Development
Development approvals are also something to research and take into consideration when looking at investment properties. Development applications and approvals can be accessed by everyone and are found on all City Council websites. There are two things to consider which can impact the return on your investment property. Firstly the negative; find out the number of building approvals versus the number of total dwellings, and decide whether there will be an increased supply of rental properties in the next few years and therefore less demand. Secondly the positive; are there any new amenities developments coming in the near future which may increase the value of your property, such as new schools, parks, train/bus stations or shopping centres?
The Property
It may sound obvious, but it’s easy to see where there’s value and where there’s red flags when looking at the property itself. The first thing to look at is the floor plan. The layout and number of rooms can greatly affect the desirability of a space.
For houses, two bathrooms are now expected, but many older homes only have one. A good number of bedrooms, with the option to convert them into spaces like studies, are becoming essential. In apartments, open spaces and outdoor areas help create the illusion of a larger space and provide multifunctional rooms for residents and guests. Of course, this will also be dependent on the demographic of the suburb the property is in and who you want to target as well.
DIY versus Expert Help
Investing in property can be a great way to diversify your asset portfolio and make a passive income. However, if you aren’t experienced and don’t have the right contacts, it can be difficult finding the right property at the right price. Many people look to property management firms or property investment advisors for help. This is where Offset Property can assist. Get in touch to see what we can do and find out more about investing in property.