With all the talk of the rental crisis in most of the capital cities across the country, there is an increasing interest in investing in property.

It makes sense, right. In many areas, rental demand is sky high, yield is through the roof, vacancies are at an all time low and prices are good.

If this has caught your interest, my number one piece of advice is don’t jump in without doing your homework first!

There are some fundamentals that you need to keep in mind when you’re looking to buy a property for investment purposes. They include:

  1. Making sure the numbers add up – check the cashflow on current interest rates plus a couple of percent higher, run the rent at current high rates but also 10-20% lower to make sure you’re covered for price corrections.
  2. Research the location and make sure the property you’re looking at matches the demographics of the area. If you’re buying in a family neighbourhood, a home or townhome would probably have higher rental demand that an apartment. Spread your net further than your local neighbourhood.
  3. Infrastructure investment – is the area benefiting from public or private infrastructure investment?
  4. Employment – are there employment opportunities nearby or is it well connected to a city via public transport?
  5. Population growth – what is the forecast population growth for the area?
  6. Strategy – most important of all is your investing strategy. For this, we always recommend you seeking advice from a financial planner. Things you need to look for here include time frame (how long you want to keep it), timing (when is the best time for you to invest), returns (do you want the property to be cash flow negative or positive – this will impact your tax)

It’s pretty easy to get caught up in talk and enthusiasm from friends, colleagues or family members who are investing in property, but don’t just jump on their bandwagon because everyone’s situation is different and what suits one person may not suit the other. Seek advice and work out a solution that best suits you.

If you want a referral to a financial planner or to Blue Wealth – property investment experts, just let me know!