What makes a good investment property?

What makes a good investment property?


Many factors make a good investment property. Today, let’s focus on six main areas.

1. Property that wouldappeal to owner-occupiers.This limits potential oversupply of rentals comparedwith other areas where most of the residents are renters.

2. Property purchased below intrinsic value.According to the BIS research, resales of apartments within a three to five kilometre of centralSydney,Melbourneand Brisbane haverealised consistently lower pricesthan established apartment resales. Off-the-plan apartments often resell for below purchase price.

3. Property with ahigh land-to-asset ratio.That doesn’t necessarily mean a large block of land, but one where the land component makes up a significant part of the asset value.

4. Property in an area that has a long history of strong capital growthand that willcontinue to outperform the averagesbecause of the demographics in the area including gentrifying areas.

5. Property that has atwist– something unique or special, different or scarce about the property.

6. Property where you canmanufacture capital growththrough refurbishment, renovations or redevelopment rather than waiting for the market to do the heavy lifting. A common example is adding a bedroom to the property, which can add more equity and rental cash flow.

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Jason Gwerder
Tuesday, 8 December 2020

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