Investing in property can be a great way to build wealth over the long term, but it can also be risky if you don't do your due diligence. If you're looking to invest in property, there are various factors you'll need to consider to find a property that will yield good returns. In this post, we will discuss the top 5 factors to consider when buying an investment property.

1. Determine your borrowing capacity

Before you start searching for an investment property, it's important to determine your borrowing capacity. This refers to the maximum amount you can borrow from a lender based on your income, expenses, and credit history. Speaking to a mortgage broker can help you to get a better understanding of your borrowing capacity and the type of loans available to you. A mortgage broker can also help you to compare interest rates and loan features across different lenders to find the best deal for your circumstances.

By understanding your borrowing capacity, you can set realistic expectations and avoid wasting time looking at properties that are outside your budget. You'll also have a better idea of the type of property you can afford, which can help you to narrow down your search and focus on properties that meet your investment goals.

2. Location, location, location

The location of the property is one of the most critical factors to consider when investing in real estate. Look for areas that have a high demand for rental properties, such as areas with good schools, employment opportunities, and public transport links. 

Additionally, consider the potential for capital growth in the area. Look for areas that have experienced steady growth in property values over the last few years, and where there are plans for future infrastructure developments, such as new transport links or commercial developments.

3.  Cashflow

Another important factor to consider is cashflow. This refers to the amount of income the property generates after deducting all expenses, such as mortgage payments, property management fees, insurance, and maintenance costs. Look for properties that have good cashflow potential, as this can help you to cover the costs of owning the property and potentially even generate an income. It will also enable you to hold onto your investment comfortably, even when interest rates are high. 

4. Research the property

Once you have identified your target suburbs, the next step is to find the right property. Before making an offer on a property, it's important to research the property thoroughly. This includes getting a building and pest inspection report to identify any potential issues with the property. Additionally, research the property's rental history and potential rental income. Consider the property's proximity to amenities, such as shops, schools, and public transport, as well as any future developments that may impact the property's value. Buying the wrong property in the right suburb can still result in a bad investment, so make sure that you do your due diligence before purchasing a property. 

5. Seek professional advice

Investing in property can be a complex process, so it's essential to seek professional advice from experts in the field. Here are some professionals you may need to hire:

Mortgage broker: A mortgage broker will help you to determine your borrowing capacity and help you to navigate your lending options, as discussed in item 1 above. 

Property manager: A property manager can help you to manage your rental property, including finding and screening tenants, collecting rent, and handling maintenance requests.

Pest and building inspector: A pest and building inspector can identify any potential issues with the property, such as termite damage or structural problems.

Conveyancer: A conveyancer can help you to navigate the legal aspects of purchasing a property, including preparing and reviewing contracts, transferring ownership, and settling the property.

Buyer's agent: A buyer's agent can help to take the guesswork out of buying property by helping you to find the right property in the right location. They can also negotiate a better deal on the property and help you to maximize your return on investment. A buyer’s agent can also make recommendations on mortgage brokers, property managers, pest & building inspectors and conveyancers if needed and liaise with the team to ensure that the process runs smoothly.

By hiring these professionals, you can ensure that you have a team of experts on your side to help you make informed decisions and navigate the complex process of investing in property. 

Conclusion

Finding a good investment property in Australia requires careful consideration of various factors. However, with the right strategy and team, investing in property can be a rewarding endeavor that yields good returns over the long term.