When it comes to building a property portfolio, many novice investors do not remove the emotional element of purchasing a home and make decisions based on their personal views and opinions such as the aesthetics of the property, the location, the layout etc. rather than what will drive the best return.
If you’re looking to build an investment portfolio, it is crucial to remember that property wealth creation is a business.
The sole purpose of property investment is to generate wealth, and by selecting the wrong property, you will be subject to significant financial risk in terms of limited capital growth, rental yield and attracting the right tenant.
By working with property professionals such as AllianceCorp, we run an 80-point due diligence process on all properties and locations to ensure they will stand up over the test of time.
Leveraging a combination of industry experience, property fundamentals (i.e. population, amenities, infrastructure, demand etc.) and data driven analytics, we understand the key metrics of what makes a great investment and how it relates to today’s ever changing property market.
To help you along the journey, we’ve outlined the key criteria to keep an eye out for when looking for an investment property:
Location Drivers
An investment-grade property will be located in an area that accounts for:
- High demand for new homes
- Government and private investment in infrastructure projects
- Close proximity to employment across many industries
- Good quality tenants
- Close proximity to essential amenities: major capital or regional centre, transport, education, parks etc.
- Major road and public transport hubs or works in place
- Low crime rates
Investment Potential
Once you’ve identified a growth location that satisfies all location drivers, you must consider the following criteria when selecting a property to purchase:
- High rental yield approx. 5%
- Low vacancy rates of 3% or less
- Suitable for desired cash flow
- High capital growth
- Historical sales data
- Predicted population growth
Property Quality
While an investment property does not necessarily need to appeal to your specific taste and preference, the property still needs to uphold a quality standard – some of which includes:
- Timeless architecture
- Neutral interior to appeal to all tastes
- Good quality fixtures and fittings
- A logical and conventional floor plan
- Privacy and security
- Sufficient bedrooms, bathrooms and garage space
- Secure or undercover car park
- Street appeal
When making an investment as large as this, it’s best to have a buyers agent on your side who is experienced with the negotiations, the market place and real estate industry.
AllianceCorp offers a great service for property investors and has helped thousands of everyday Australians (like you!) achieve their financial goals. We take the stress and uncertainty out of buying your next investment property and show you the ropes in what can be an otherwise complex investment environment.
For more information on how you can build wealth through property, simply fill out the form below to request a no-obligation, 45-minute consultation with a Senior Property Wealth Planner valued at $495 absolutely free!