Five Signs of a Good Long-term Investment Property
Jul 05, 2021
Buying a rental property is a great investment option. It can deliver big returns and give you the financial stability that you’ve been working for. However, many people are often intimidated by the prospect of buying an investment property, and understandably so.
Indeed, there are plenty of pitfalls when it comes to real estate investment. If you don’t play your cards right, you could risk losing serious money. But, with some research and a little help from professionals, you should be able to find an investment property that’s right for you and your financial situation.
To help you get started, here are five signs of a good long-term investment property.
- Good schools around the area
One thing that renters look for is proximity to good schools. Nowadays, quality schools have a lot of students wanting to enrol. Because of this, they often have to limit the number of enrolments and prioritise in-zone families. Thus, it’s a good idea to look at the quality of the schools that are near your investment property. If it’s near a highly regarded school, it will likely improve the appeal of your rental home.
When it comes to research, you don’t have to go too in-depth. It’s good enough to have a general understanding of what the schools offer. If you have friends with children, you might want to ask them about the best schools in the area.
If your investment property is an average family-home, then chances are your tenants will have primary-school and high-school aged kids. On the other hand, if you have a one bedroom apartment, you’ll likely be dealing with university students who want to be closer to campus and the CBD.
- Near public transport
Another thing tenants will want is access to public transportation. This is relevant to workers, university students and high schoolers. They all want one thing and that’s convenience. Convenience will make your property more valuable in the eyes of potential renters.
As a result, it’s important to consider your property’s proximity to train and bus stations. In some cases, people will want their homes to be near their actual workplace. In this case, it would be best to have a property that’s near the CBD or the local business district.
- Plenty of amenities
Of course, work and school aren’t the only places that your tenants will go to. They will also want to take a walk in the park, eat out at a nice restaurant, go to the gym and watch a movie. The quality of the nearby amenities will significantly affect the value of your home.
Nowadays, it’s easy to look up a restaurant and find out what people think about it. Use this to your advantage. Make sure that your property is near that cafe that everyone is crazy about or the gym that’s praised for its cleanliness.
- Great median rent
Since most of your returns will come in the form of rent money, it’s essential that you know the average rent in your particular area. You need to calculate the amount that you require to cover mortgage payments, taxes, unexpected vacancies and so on. If the rent on your investment property covers most of these expenses then you’re in pretty good shape.
Additionally, you have to look at the long-term trends. Is there a chance your property will increase in value in the next few years? What type of renters are living in this area? Are they younger professionals or established families? All of these factors can give you a good idea of your property’s sustainability.
In regards to the housing market’s dips and peaks, it’s best to consult with a real estate agent for advice. Getting professional assistance in this regard can help you prepare for contingencies.
- Future developments
By looking at planned developments in your area, you can get a good idea of how much your property will increase in value. If the government is planning to build new train stations and public libraries, expect the homes nearby to increase in value. The same can be said for renovations and upgrades.
However, new housing developments can increase the number of competition you have. This, in turn, can lower the demand for your own property and therefore its value.
These are the major things that you should look for in your investment property. Here are few strategies for investing in properties. That being said, tracking property value is complex and unpredictable. There are simply too many factors to consider to be 100% certain about price changes. As such, it’s important to be cautious in your real estate investments. After doing independent research, we recommended getting the aid of a real estate agent. These professionals will have more knowledge on what type of property can bring your consistent and significant returns.