There are a number of factors to take into consideration when buying an investment property, and these will depend upon your motivation for buying. You may be after the highest tax deductions you can obtain, in which case you would need to ensure you had a relatively newer home to maximise on depreciation deductions. You might be wanting to invest in an area with great capital growth, or you have outgrown your current property and want to hang onto it when you transition into your next one. Whatever your motivation, there are key things to keep in mind that help attract good quality tenants.
- First and foremost, the overall presentation of the property is extremely important. Good quality tenants want good quality, well presented homes that are neat, clean and tidy. There are plenty of bargains to be had when purchasing, however it is critical that you factor in the costs to tidy up inside and out (does it need painting, new floorcoverings, new window treatments? Is the yard presentable or does it need an overhaul with landscaping? Are there any hazards, rubbish/excess items etc). Improving the presentation will improve the rent that can be achieved, along with the quality of tenant that can be obtained. We can assess any prospective purchase for you and advise our thoughts on items that could be carried out to increase return and minimise risk.
- Storage! These days most tenants don't have wardrobes and expect that built in robes will be provided. If you haven't got them, budget to get them. This can be the difference in rent price achieved, and whether your property is let quickly to the best tenant.
- Heating and cooling is highly sought after and quite simply good tenants expect it. If you don't have any, where possible budget for it as those that don't have it have a much higher rate of turnover, meaning your return can easily be reduced. Insulation is also critical, so make sure the house you are purchasing has it, or that you can factor this cost into the purchase.
- Outdoor entertaining area's. Where possible some form of undercover outdoor entertaining area is highly sought after and will attract more inquiry.
- Sheds. Quite simply there is market for both those properties with a shed, and those without, however a shed will attract a higher rental return.
- Location. There are pro's and cons for everywhere! Some locations that are less desirable (such as main roads) attract a higher rate of return as their purchase price is lower, however they may also attract poorer quality tenants, lower capital gains. Each property purchase needs to be assessed upon its merits, taking into consideration the motivation of the investor.
- Swimming pools - whilst highly desirable for some tenants, they also tend to be costly to maintain if the right steps aren't put into place at the commencement of tenancy. Ensure that any property is compliant with pool fence regulations.
For more information any prospective purchase, or for a free assessment to see how you can improve your returns on an existing investment please contact us on 8386 1555.