What to look for in an investment property

What to Look for in an Investment Property

Hey there! At JKL Real Estate, we know that investing in property is all about building your wealth and securing your financial future. Unlike buying a family home, this process is purely a financial decision. Here’s our guide to help you navigate the journey of finding the perfect investment property.

Define Your Goals

First things first, understand exactly what you want out of purchasing an investment property. This is mostly about setting clear financial goals. You may have different strategies in mind, so it’s crucial to think like an investor.

Capital Growth is Key

Capital growth is often the main driver behind property investment decisions. Choosing a property that is likely to increase in value is the most important decision you’ll make. Here are some tips:

• Do Your Research: Local knowledge and patience are invaluable.
• Buy at the Right Price: Understanding the market and waiting for the right opportunity is crucial.
• Market Cycles: Most property markets are cyclical. Aim to buy in a buyer’s market and sell in a seller’s market.
• Affordability: Purchase within your means to avoid financial strain and the need to sell at a discount.

Understand Rental Yield

Rental yield is a critical financial indicator of an investment property. It’s a quick calculation showing what you will make on your investment property as a percentage. To calculate rental yield:

• Difference Between Costs and Income: Subtract your expenses from your rental income.
• Clear Indication of Returns: This helps you understand if the property aligns with your investment goals.

Cash Flow Strategy

Investment property cash flow is about “income less expenses,” just like any business. Here’s what to consider:

• Positive Cash Flow (Positively Geared): When the income from the property exceeds the interest repayments and other outgoing costs.
• Negative Gearing: When your rental return is less than your outgoings and interest. This might make you eligible for a tax concession. For more on this, see our separate post on “Cash Flow Strategy.”

Location, Location, Location

As the saying goes, location is everything. It’s vital for both capital growth and rental yield. Consider properties that are close to:

• Good Schools
• Shops
• Public Transport
• Healthcare
• Other Amenities

These factors will influence the rent you can charge and the property’s appreciation in value.

Type of Property

The type of property you choose depends on your budget, lifestyle, location, and investment goals:

• Houses: Often more expensive and require more upkeep but typically show better capital growth.
• Units: Usually less expensive, come with body corporate or strata fees, and sometimes don’t provide the same capital growth as houses.

The Most Important Step: Research

The best thing you can do is research. Understanding the market, knowing the area, and being aware of the financial implications will set you up for success.

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At JKL Real Estate, we’re here to help you feel at home in the world of real estate. Whether you're buying your first home or refinancing, our family-oriented approach ensures you have the support and expertise you need. Welcome to the JKL family, where your home buying journey is our top priority.

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