Three things to look for when buying an investment property

Buying an investment property is a big deal and any purchase decision shouldn’t be taken lightly. So, here are our top three tips on what to look for when making that all-important investment purchase.

Focus on the return

Before you buy an investment property, think about everything that could affect your return - both at the end of each year, and also when you sell it down the track. You obviously want to buy a property that appreciates over time, but more importantly – to ensure it doesn’t put a strain on your cash flow month-to-month.

Getting this right will come down to the price you pay for the property, the rental income it can generate, any added costs such as body corporate fees or landlord insurance, and then any tax incentives like negative gearing.

Don’t make concessions on the quality of the building

Knowing the property is in good condition is not only important for making the building look good for when you rent it out – but it also means you’ll pay less in maintenance over the years.

Outside of repayments, maintenance is one of the biggest costs for a landlord, so if you need to replace the roof or re-plaster the walls in the first few years, it can set you back. It’s important to be prepared for a few surprises in the first couple of years of managing an investment property, so do all the required checks to limit them.

Think long-term

Any investment in property is a long-term commitment, so don’t buy assuming you’ll make quick capital gains in just a couple of months or years. The market can fluctuate, and often runs in cycles – so when you buy with a long-term strategy in mind.

The long-term approach has a number of benefits. It gives the investor time to study the market and sell at a time that suits them – it also removes the short-term pressures of buying and selling in a short space of time.

It can also be lower risk, allowing the owner more time to make the most of tax incentives and means a property manager can be appointed to ensure the investment is as hands-off as possible for the owner.