What Kind Of Investment Property Should I Buy?
Once you’ve decided on the location you’re going to invest in (as we’ve talked about previously, it should be a booming location), you need to work out what type of property to buy there. So, I’ll talk you through some factors you should consider when deciding on what to buy.
This is key. Make sure the property you are buying adds up to be positive cashflow, because you can own an unlimited number of these types of properties. So, do the numbers.
What’s In Demand?
Look at the different types of properties that are most in demand (specifically for renting) in your location, whether it’s houses, apartments, or commercial.
Check the Land
Remember that the land is what is actually making capital growth, not the building itself. So, make sure your investment has an appropriate allocation of land for your location.
What types of tenants are the middle of the market in your area? Who would you want to rent to, and what kinds of properties are they attracted to?
Warranties and Guarantees
Check whether the property comes with warranties and structural guarantees – essential for risk management. New properties will be your safest bet here.
Do your research on any commonly occurring natural disasters for the area, like flooding, cyclones, earthquakes, etc. Know your history on the local area and whether your property is built to code, in flood areas, and so on. Ideally, you should be aware of potential problems or avoid them entirely.
What kind of pests might the property be prone to? Ideally, avoid pest infestations by buying new and ensuring the property comes with the appropriate termite inspections, and ensure that your property manager sends pest inspectors in for routine inspections.
Avoid structural problems by, ideally, buying brand new, and always get a building inspector to go in and check everything before you finalise the purchase.
Remember that maintenance is the silent killer. It can really affect cashflow, but also cause stress to property investors. You don’t want to be constantly sending tradesmen in for repairs. The best way to ensure low maintenance is to buy brand new.
As you can see, there are a lot of factors to consider when it comes to choosing the right property in your location… but most of these can be summed up with a simple rule: buy brand new, middle of the market houses. If you do this, you’ll avoid most of the issues and risks that could otherwise get in the way of your cashflow and growth.
Daimien Patterson is the CEO of Integrity Property Investment, a property investment company based in Australia. He regularly produces books, blogs, and videos on the topic of property investing. Head to [integritypropertyinvestment.com.au/pi4b-webinar-recorded] for instant access to Daimien’s free property investing webinar where you will learn all the things they didn’t teach you in school!