Looking for an investment property? Will Honey from The Property Collective shares a few handy tips. Photo: File.
If you’re thinking about purchasing an investment property, there are a lot of things to consider before you can get stuck into finding your dream investment. Will Honey from The Property Collective explains the process from an investor’s perspective.
1. Figure out why you’re investing, as this will determine what sort of properties you look at.
People invest in property for a range of reasons, and depending on your investment strategy, what you end up looking for will vary.
“Are you looking to borrow against your existing house to start to build a portfolio of properties, so you can eventually retire and live off the income? Are you looking to invest with the view to redeveloping the site down the track? Or do you want to build an investment on existing land you own to draw an income from? Each of these options will impact how much you borrow, and what kind of properties you look for,” Will said.
Once you have a clear investment strategy, it’s time to think about your finances.
2. Get your finances in order.
“It’s important to have your financial ducks in a row before you start actively looking. Your personal circumstances might also change your position in the eyes of the bank – for example, if you’re older, banks might be more reluctant to lend to you, versus someone with a longer future career potential,” Will said.
Because you’ll be seeking an investment loan, the bank will also take different things into consideration, such as the rental potential of the property you’re looking at, its likelihood of returning on the investment, etc. Have these conversations early, and be aware of what your borrowing capacity will be before you hit the ground to start looking at properties.
3. Do your research.
Now you’re ready to start looking, what should you be keeping in mind?
“The most important thing to do is to do your research,” Will said. “Look at the areas you’re interested in, and look up the average rents, proximity to amenities like schools and shops, the crime rate, the council taxes. All of these things will impact the rental prospects of the property.”
Once you’ve narrowed down the location and property type you want to invest in, you’ll be able to make an informed search and find the right option for your investment goals.
4. Start looking.
While you can absolutely go it alone when it comes to finding an investment property, your other option is to work with a real estate agent.
“An agent will do the groundwork for you to match your investment strategy with potential properties, and they may also be able to connect you to properties before they hit the market, which is a big advantage to consider,” Will said.
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