As a current property investor or someone looking to become one, we can all agree that having someone point you in the right direction would be ideal. There are hundreds of websites and sources dedicated to helping you find success when purchasing property. The one thing they all have common: research. Here is how property research can help you pick investment winners time and time again.
Research an Areas Rents
RENTAL RETURN – Your goal as a property investor should always be to get a better rental return than the average for that suburb. This is how you know that you are on to a good thing, and should the market move you will be able to adjust your rent accordingly with no adverse effects to your income.
CASH FLOW – In order to understand a property’s potential cash flow, you need to look into gearing and tax deductions. As you research different suburbs you need to be looking into affordability versus rental return. This is essential when finding the top suburb to invest in.
RENTAL STRATEGY – When purchasing an investment property, you need to establish a strategy for increasing your rental return. Positive gearing means enjoying a positive cash flow. Certain areas and markets will have different strategies you can utilise to help increase your rental return. You need to have a strategy in place prior to purchasing so that you can understand the full potential of the property you are investing in.
VACANCY RATE – An area with a large vacancy rate will have a big impact on the potential yield of a property. You should be aiming for a rate of two to three per cent. Lower is amazing, higher and you could be in trouble. If the per cent is higher and you know this prior to purchase, it might be better to search for property in a different area.
Research the Infrastructure
SUPPLY & DEMAND – It is vital that you know what is happening with the housing supply and population growth. Both of these will affect a property’s returns. You need to know if there are plans to release large blocks of new land into the market or other such plans that will affect your investment.
MAJOR PROJECTS – You need to know what developments are planned for the area now and in the future. Research the areas local council plans and look into what developers are doing. The answer to these can have a considerable impact on the property investments in that same area both good and bad.
MAJOR RETAILERS – If any big retailers have plans to expand into a certain area, it means that there are going to be people spending money in that same area. It is worth looking into these areas as they may have good potential for investment.
COMMERCIAL SPACE – If there is commercial office space being expanded or contracting, this can contribute greatly to the investment potential of an area. Generally, locations where there is work there is good property returns.
TRANSPORT PLANS – No one wants to live, buy or rent in an area with no accessibility to major transport. To avoid investing in one, you need to look at the currently establish transport options as well as the future transport plans for the area.