Use selection criteria for property investment
Most people will use selection criteria for property investment. There are the very obvious attributes that most property investors will consider and then there are some that may often be overlooked or not considered.
The first thing to cross a new property investors mind is probably one of the most important, where will I buy? The answer will depend a lot on the property investor’s knowledge and experience in firstly choosing the current ” best” city for investment be it Sydney, Melbourne, Brisbane or Perth.
The next question may well be the type of property to purchase as an investment property be it a unit, townhouse or house and land. We would always make this decision based on the most popular type of property in the area for property investors and owner/occupiers. For example, if you are purchasing your investment property near a CBD, then the obvious ‘type’ is a one or two bedroom unit. If you are purchasing a property investment in the outer suburbs of a major city, then house and land will probably be the best property investment.
Other issues to consider are the micro (near to) facilities and the macro (ten minute drive away) facilities. Look at a selection criteria for your property investment and you should be considering everything from local cafes, child care centres, convenience stores and hairdresser’s to major hospitals, transport links, universities and schools.
One issue is highlighted in the media this weekend that many do not pay enough attention too; the suburbs where almost every home is an investment property! While this is not always a bad thing, it can increase the risk quite considerably on your property investment.
CoreLogic’s Profile of the Australian residential property investor report has stated that there are now 2.6 million investment properties around Australia. In some suburbs, almost all the homes are investment properties, including some of Sydney and Melbourne’s inner-most property hotspots.
Property investors tend to dominated around typically strong rental market areas, such as inner-city locations near hospitals and universities. Ultimo, which topped Sydney’s list of property investor dominated suburbs actually recorded a massive 99.8 per cent of apartments in the hands of investors.
Angie Zigomanis, BIS Shrapnel senior manager of residential identifies some of the potential problems of property investment in suburbs with extremely high property investor ownership.
“One of the problems of having a high proportion of investors in one area is more volatility in the market.
Where an owner occupier would attempt to batten down the hatches in times of financial difficulty, investors could respond by putting the property up for sale.
Investment properties are a discretionary purchase to some extent, and if times got harder they’re the properties that would be the first to go,” Mr Zigomanis said.
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