Property has always been considered to be one of the safest and most rewarding long-term investments, so if you're considering making an investment in property, you will probably want to know what type of property you should choose.
Before you even start to look at properties, it is important to establish your investment strategy because that will dictate what type of property will best suit your defined financial objectives. Whether you're after long-term capital gains or shorter-term income generation through rental returns, your strategy should be clearly defined and non-negotiable, regardless of how tempting a deal may seem at the time.
Once you've worked out your strategy, you may find the following points about different types of investment properties helpful in guiding you towards an investment decision.
Apartments vs houses
From a budget perspective, an apartment is generally cheaper to buy than a house. However, there can be a significant cost differential between newly constructed and older apartments, so it is vital to do your research thoroughly.
An apartment will also need less maintenance than a house, but there are other considerations such as communal living lifestyle, the mix of tenants and body corporate fees.
Apartments have also traditionally had better rental yields than houses, but in some areas, such as Perth, significant development is taking place and many new apartments have come or will be coming onto the market. You'll need to look at the rental history of the area, market demand, number of available properties in the area etc - and always seek expert opinions from reliable, experienced professionals.
Off-plan or existing?
When you're buying off-plan, it is important to make sure you haven't fallen for a glossy brochure or a compelling media campaign, but that the property will meet your investment strategy objectives. Also, because you won't get to see the finished product before you sign the contract, you need to be sure of the developer's credentials.
An older house has the potential to be renovated which can be a very good way of adding value and accelerating capital growth. However, as with all investment decisions, the choice has to be made after thoroughly researching the market to make sure there will be a demand for that particular type of dwelling, that it's appropriate for the age and demographic profile of residents and that there is good resale history. For example, a good investment choice would be a 3-bedroom family house in an area where the population is growing, which is attracting public and private sector funding for infrastructural upgrades (such as roads, shops, restaurants, sporting facilities, cycle tracks, community services etc) and which is in close proximity to schools, public transport and other amenities.
A well-chosen investment property is likely to deliver good returns in the future, both in terms of capital growth but also in the form of rental returns. You should keep tenants uppermost in your mind when looking for an investment property because your focus should be on what's likely to appeal to prospective tenants and what would make them choose your property over any other.
If you are in the process of buying an investment property and would like information and advice on any aspect of property management, you'd be in good hands if you contact Time Conti Sheffield. We have been at the forefront of Perth property management for over 60 years and have an established reputation for integrity, professionalism, expertise and hard work - and you can find us on 08 9362 5333.