The steps to finding your next investment property.
Selecting the right property for your next investment is a process. If you're a seasoned property investor, you've likely been through it many times — the research, the negotiating and the waiting. There's a few key steps you need to follow to make sure your next property investment is a wise one. Here's our steps for finding your next investment property.
Have a long-term strategy
Before your start looking, determine what your long-term strategy is with your investment property portfolio. This will keep you focused in your search. For example, you may have specific yield rates you want to reach or particular property types and locations in your strategy. The important thing is that there's alignment between your strategy, current portfolio and the search for your next property.
Do your research
Taking the time to do your research at the start may feel like you're adding time to your search, but it will actually save you time down the track. Thorough research will help you quickly determine if a location or property meets your investing strategy, while helping you rule out the properties that simply aren't a fit. Make sure you refer to reliable property data and population statistics from places like Core Logic and the Australian Bureau of Statistics.
Your accountant, lawyer or other professionals may also be able to provide you with research as part of their fees. Make sure to ask them for any information they think will be helpful in your research process. You'll want to understand things like performance of the market, demographics and any future trends or industry changes (eg. lending criteria) that could impact your portfolio.
Narrow down locations
Once you have completed your initial research, start searching for locations that fit your findings and long-term investment strategy. Generally, you'll be looking for areas with above average economic growth, and a solid amount of infrastructure and amenity. If you're buying in a major city, connectivity to the region's CBD may also be another important factor to consider.
Analyse the property
When you've found a property in a location that meets your criteria, you need to objectively analyse if it fits your strategy. Keep an eye out for anything that may need costly maintenance or repairs. Think things such as cracks, plumbing issues or water damage. Make sure you also analyse the property from the perspective of your ideal tenant. Ask yourself if a quality tenant would rent the property you're inspecting and if it's a property with the potential to attract long-term tenants.
Staying focused on your long-term investment goals throughout the research process will help you find the right investment property to add to your portfolio. As always, the points in this article are general in nature. When you're working through the process of purchasing an investment property, always engage the services of a trusted professional to give you advice specific to your individual needs.