How to get maximum ROI for an investment property?

When purchasing an investment property, there are numbers of factors that could increase or reduce the potential return on an investment property. In this case, it is not just location, location, location.

When considering a property for investment purpose, the most critical question need to consider is “will the property attractive to tenants”? But how do you know what will appeal to someone you've never met? Settling on a handful of locations is a good start. Young families and couples are the ones that generally drive the capital growth, so the location should within a reasonable distance to schools, shops, transport and an employment hub. Also look for low vacancy rate and high rental yield.

Although location plays a significant role, it is not the only defining factor. There is a mistruth a lot of people subscribe to when selling investment properties, which is to neglect the quality because you don’t have to live in it. You have to buy the right quality property because someone has to live in it. When purchasing an investment property, you also need to have an exit strategy, which will generally involve selling to homeowners as well as the investor.

To get the most value, you need to think about the demographic or renters who are likely will be living in the area. You have to match the property with the city. For example, If you have a good quality home, decent sized apartment, if that in Melbourne, then it will be a good investment, but if you put it on 50km away from Melbourne, it wouldn’t have much interest.

When investing in any property, you need to be wary of any danger signs. One of the biggest mistakes people make is not knowing what their cash flows are. Inadequate cash flow is much danger than paying too much for the property. It is essential to know how much your chosen property is going to cost after tax, every week after you have settled. There is no point in buying a top quality property, and you cannot afford it.

When looking to purchase an investment property, always ensure the person that you are dealing with is an expert. Everyone has their idea on the property, but not everyone is the expert. You still have to be wary if someone who tells you that their way is the only way to invest. Only buying for cash flow is flawed, just buying for capital growth is flawed too. You need to find a property that is going to work for you and improve your finance.

As well as speaking to a real estate expert, please come to talk to Kevin Poh on 0415280016 as he will give you his insight on the market.