Investing in property can be a great way to build wealth and secure your financial future. Whether you’re a first-timer or an experienced investor, buying an investment property in Adelaide, or anywhere in South Australia for that matter, is a big decision that requires careful consideration.
Our Property Management team has put together seven key factors to consider when buying your first investment property.
1. Location
The location of your investment property is crucial to its success. It’s vital to choose a location with high demand and potential for growth. If you can’t afford to buy into a high-growth area, don’t worry! You can still take advantage of the market by looking at the surrounding suburbs.
However, timing is key, so you’ll need to know which phase of the cycle the local property market is in to maximise your chances of benefiting from the so-called ‘Ripple Effect’. Essentially, this means you’re riding the wave of growth from adjacent suburbs.
To find areas before the ripple of growth hits, here are some top tips:
- Measure property values by comparing the median prices of adjoining suburbs. If there’s more than a 5% variation, the suburb next door could be the next hot spot.
- Keep a close eye on median price trends every quarter. Once you’re confident the cycle has kicked off, look for properties within your budget that are as close to the growth area as possible.
- Subscribe to property alerts through real estate portals for properties coming onto the market within the areas you’re interested in so you’re one of the first to know.
By following these tips, you’ll be well on your way to finding the perfect location for your investment property.
2. Property Type
The type of property you choose to invest in is something to consider. For example, a house may be more attractive to families, while an apartment may appeal to young professionals. The type of property you choose will depend on your personal preference and your budget, but you should take note of the kind of properties that are in demand in the areas you’re looking to invest.
3. Condition of the Property
When buying an investment property, you’ll want to make sure the property is up to scratch. A well-maintained property will require less maintenance, which means lower costs for you. However, if the property needs repairs, you may have to spend money to get the property up to a rentable standard. Make sure to have the property thoroughly inspected by a reputable building inspection company before you buy it and take note of any repairs that may be needed.
4. Rental Demand
Before buying an investment property, consider the demand for rental properties in the area. If there’s a high demand for rental properties, you’re more likely to find tenants quickly and receive higher rent payments. You can research the demand for rental properties in the area by looking at local real estate listings, checking with a local real estate agent like McGrath Real Estate, or using online property market analysis tools.
5. Property Management
If you’re new to investing in property, a reputable property manager can handle all aspects of managing your investment property. They will help find tenants, collect rent, and deal with any issues. This can be especially important if you don’t live near your investment property.
If you’re looking for a reliable property management company in South Australia, look no further than McGrath Real Estate. Their highly regarded and professional property management team has years of experience in managing properties and can help you maximise the potential of your investment.
6. Rental Yield
Another key factor when buying an investment property is the rental yield. This is the amount of rent you receive as a percentage of the property’s value. A higher rental yield means you’re receiving a higher return on your investment, which is obviously a good thing. When calculating the rental yield, it’s imperative to factor in the cost of any repairs or upgrades you may need to make to your property.
7. Mortgage and Other Costs
What about the costs involved in the purchase of an investment property? You’ll need to take into account the cost of the mortgage, property management fees, insurance, and any other costs associated with owning an investment property. It’s essential to clearly understand these costs and make sure you can afford them before you purchase.
Conveyancing is another consideration when buying an investment property. We asked Melanie Mugford from RW Morgan Conveyancers about the benefits of using a conveyancer.
“When buying a property, a Conveyancer can review your Contract and the Form 1 Vendor’s Statement prior to signing a contract or during your cooling off period. By speaking with a Conveyancer, you will further understand the type of property you are buying, the stamp duty and purchase costs, as well as the rates applicable to the property. This will provide you with information so you can make an informed decision to purchase the investment property.”
To sum up, investing in a property can be a wise financial decision, but it is vital to take into account all factors before making a purchase.
By doing your research and seeking advice from experts, such as the professional Property Management team at McGrath Real Estate, you can make an informed decision and set yourself on the path towards a successful investment.
Phone our office on 8350 4200, or drop into 42 Brighton Road, Glenelg.