Blog What makes an “investment grade” property?

What makes an “investment grade” property?

01 March 2018
What makes an “investment grade” property?

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Investment properties can be a good form of investment but it is important to understand not all properties will make a good investment. There are certain features that make a home into an investment grade property, so for tips on what to look for and how to find a high yield investment, ask the following questions:

1. Is it In the right location?

Location will always be the driving force determining whether people would love to buy or rent a property. It’s important for them to be close to their work, to the CBD, to public transport, good schools, hospitals, shopping hubs, and parks.

If your property is close to a good school it’s likely that you will have a young family as your tenants. If your property is near lifestyle amenities it’s likely that you’re going to have a young professional as your tenant. Make sure to factor in the location and amenities that are important to the demographic you would ideally like for your tenants.

2. Does it have strong demand and low vacancy rate?

Investment properties are assets, and assets should produce a regular income stream. Investment grade properties offer a steady cash flow by having consistent strong demand and low vacancy rate. Your real estate agent can provide insight into the rental demand in general and what tenants are looking for.

We offer complimentary property reports to all of our customers including valuable information like market comparisons, suburb insights & properties sold in the area recently.

3. Is it in a secure location and with good security features?

Investment grade properties are situated in a safe area and offer good security features such as security systems, alarms, gates, and intercom, making the property more desirable to tenants. Some of these features can be added after purchase if you think they are necessary, but be sure to ensure you factor the costing into your decision.

4. Can it increase in value?

Investment grade properties tend to increase in value through capital growth over time. They can also increase through renovations or due to developments or improvement opportunities in the area like new road construction.

5 . Does it suit your investment strategy?

Your investment property can be positively geared where the property generates more income than the monthly expenses. This will give you extra money to live off or reinvest. 

The property can be negatively geared where the monthly expenses are greater than the rental income. This will lessen your taxable income, and properties that are negatively geared may grow in value overtime, which can offset your financial losses. It’s essential to know what kind of strategy will work for you.

It’s important to make a smart decision when choosing an investment grade property. It also pays to have a good investment property loan that is suitable to your needs and financial status. You can check out our investment loans today so you can start searching for an investment grade property.

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