Are you considering purchasing an investment property in Queensland this year? Purchasing an investment property often requires a different set of criteria compared to purchasing a home to live in, and it is well worth being aware of what tenants are looking for in a rental property as well as what your budget will allow for.
Five Tips for Buying an Investment Property
Know Your Budget
Before you speak to your bank or mortgage broker about borrowing funds to purchase an investment property, sit down and work out a clear budget including your purchase price range, stamp duty, legal costs, mortgage insurance, and extra funds for renovations or to pay the bills while the property is empty. Once you have these noted down and have realised the cost of purchasing, you can then speak to your loan provider about pre-approval so that you know exactly how much you will have available. Your budget may or may not need to be changed based on your pre-approval amount.
Prepare for Ongoing Costs
One area many first time investors forget about is the ongoing costs of owning an investment property. You should always have two to three months of rent saved in an account to deal with any costly maintenance issues, to cover the mortgage should the property be empty or to make sure you are covered should rates or other costs increase. Build this into your budget so the money is available straight away.
Research Areas of Good Growth
Investment properties are usually purchased in areas that see good growth, and taking a long term view is the best option. For most people, investment properties are a long term strategy and they don’t expect prices to rise quickly. Growth rates will vary depending on where you buy however the average growth rate in capital cities is between 5 – 7% depending on whether you own a unit or a freestanding house; regional areas will be slightly lower.
What are Your Goals?
Different investors have different goals. Some buy properties with the long term goal to live in them a few years down the track. Others buy for the potential capital growth, while others again buy to hold for the long term. The type of property you buy will depend on these goals so, be clear about them before you start looking.
Buy with Your Head
When we buy homes to live in, many of us buy with our hearts; we fall in love with the location, the layout, the big living areas or the style of the home. When buying for investment, buy with your head; what are tenants going to be looking for? Look for things like air conditioning, family friendly layouts, a workable sized kitchen, good sized bedrooms, two or more toilets, a good sized bathroom if there is only one, and close to public transport.
If you’re considering buying an investment property in Queensland, talk to the team at Salerno Law. Our experienced conveyancing team can help you navigate the buying process, with extensive support and access to a dedicated team who will guide you each step of the way.