Investment properties can be a good investment but take note that not all properties are worth buying. There are certain features that make a home into an investment grade property, and savvy investors know what to look for and how to find a high yield investment.
To know what they are, here are some of the characteristics to look out for in an investment grade property:
Location will always be the driving force determining whether people would love to buy or rent your property. It’s important for them to be close to their work, to the CBD, to public transportation, good schools, hospitals, shopping hubs, and parks.
Of course, the type of amenities close by will affect what kind of tenant you will have. So it pays to understand the location of the property to know what kind of renter you will get. 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. So make sure to factor in the location and amenities that are important to your target renters.
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.
Investment grade properties are situated in a safe area and offer good security features such as security systems, alarms, gates, intercom etc.
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.
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. Along with that, 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 loan products today so you can start searching for an investment grade property.
04 February 2018
If you have plans to rent out your home and have your mortgage change from owner occupier to an investment loan, it’s important to ask these questions of yourself first.