Many investors become confused with what key characteristics they should be looking out for when it comes to purchasing an investment property. As a buyer’s agency, we’ve had extensive experience, and have sold over 2,000 ‘investment grade’ properties for our clients over the last thirteen years. So, what features contribute to an ‘investment grade’ property which ensures tenants are queuing up to lease your property? Here are our top tips;
1. Location, Location, Location
Some investors are lured by cheap and affordable properties overseas or interstate. But it’s important to remember the three golden rules of property investment – location, location, location.
The property should be walking distance (fifteen minute maximum) to a train station, because as Melbourne’s population grows to seven million people by 2050 and our lifestyles become busier and busier, people will want to reduce commuting times and have easy access to the CBD and the rest of Melbourne.
An investment property should also be a short walking distance to lifestyle attractions such as cafes, shops, parks, beaches and any other positive amenities such as shopping centres, restaurants, and bars. Check out a property’s walkability or walk score on walkscore.com which rates a property on a scale of 1 (car dependent) to 100 (walk everywhere). If the score is less than 75, you should consider another property in a location that is closer to lifestyle amenities.
2. Carparking
An investment property should have at least one carpark allocated. A vast majority of the population still use cars for various reasons, such as visiting family and friends or going on social outings, even if they don’t use them to commute to work on a daily basis. Ideally, the carpark will be “on title” and it would be a bonus to have secure or undercover parking or a garage.
3. Security
Do your homework on the crime rate in the areas you are looking to purchase in, as there may be certain streets in the area which are considered to be ‘dodgy’ or high in criminal activities. Properties that have high security gates and fences and / or security intercom systems and alarms will be preferred by many tenants.
If you wouldn’t want your daughter living there, then you should choose a safer location. When buying apartments, avoid ground floor apartments that are more accessible to break into and choose apartment buildings with secure gates and a security entrance.
4. Street appeal
They say you only get once chance to make a first impression when you meet people, and the same is true when a tenant first sees your property. Many tenants will use Google maps “street view” to check out the street appeal of your property and could rule it out instantly if it is not a quiet, tree lined residential location.
If the property looks shabby or rundown from the outside, many tenants will put your property towards the back of the queue. Be careful of buying properties on main noisy roads or properties adjacent to freeways or other negative amenities such as backing onto train lines, bus or tram stops, petrol stations, factories or schools.
5. Orientation and light
Get the compass application out on your ‘iPhone’ and make sure the living areas are facing north or north-west as most tenants prefer to live in “light and bright” properties that are more energy efficient and are naturally light all year-round without having to have the lights on all the time. Avoid south facing properties and properties where the living areas face east as they will only receive brief morning sun or light
6. Aspect and views
Properties with a favourable aspect or appealing views will always be highly sought after by tenants. Properties that overlook attractions such as the city, water, parks and gardens will always have a certain “WOW” factor that sets them apart.
Many investors buy a property because it is “cheap” but it will always be cheap when they go to sell it too.
A savvy investor instead focuses on a quality property with views that you will always pay a bit more of a premium for, but it will be one that will usually achieve higher capital growth, better rental returns and shorter vacancy periods.
Make sure your investment property ticks the right boxes
In summary, buying an “investment grade” property is about focusing on the key criteria above to set your property apart from the competition. It will remove that stressful situation for landlords of having a rental property vacant and needing to attract a new tenant.
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