The first step to making a good investment, is knowing what to look for.
This guide will help you get a better handle on exactly what you should be looking for when considering your next property investment. We’ve been professionally buying high-performing investments since 1998, below you’ll find our best advice on what makes a good investment purchase.
The fundamentals of a good property investment
Low and medium density locations
It’s important to only consider properties in locations where there are significant barriers to overdevelopment– particularly for units. Your property is worth less in an oversupplied market.
For e.g., Victoria Park near Zetland in Sydney has over 6000 units in it. Just 800m away in Beaconsfield, the area is zoned medium-density, meaning there’s no high-rise development permitted. In Zetland you might have 70-80 apartments on the rental market at a time, in Beaconsfield, you might have 1 or 2.
Less unit supply > better tenancy competition > lower vacancy > higher rental return
The smaller the block, the better
When you’re buying a unit, the smaller the block, the better. We recommend narrowing your search to units in blocks of no more than 30.
Again, it’s about preserving your property’s standing in the market. As a rule, when you invest into properties in large unit blocks, you’re at a high risk of frequently trying to lease your property with several other properties also available in the block. This can create negative price competition and make your property more difficult to lease.
Prioritise optimal floor plans
An optimal floorplan includes
- Minimal wasted space e.g. hallways
- Parking and outdoor space
- Second bathroom (for 2+bedroom properties)
- Bedrooms that are separated by a bathroom (for 2+bedroom properties)
Here is what an optimal two-bedroom floor plan looks like. The only thing that’s missing is outdoor space or a balcony
Tip : If you’re buying a one-bathroom property, make sure that the bathroom is not solely accessible through the bedrooms. If your tenants have guests, they won’t want them walking through their bedroom to use the bathroom. This detail will be valuable long term and will make your property more attractive to tenants.
Size matters. Find a property with an internal size that’s above the median square meterage for the market it’s located in.
2-bedroom apartments in Sydney are usually between 75-80m2, 1 bedroom apartments average around 55-55m2.
Subject to the efficiency of the floorplan, always buy bigger.
It may cost 5-10% more to purchase a larger property, but if it’s still within your budget, consider it. A greater floor size is a worthwhile point of difference.
Tip: Achieving an additional rent as little as $30/per week because of a superior floorplan, size, location etc. gives you an extra $1560/year in income.
Aspect & natural light
Natural light can make or break the appeal of your property to both tenants and future buyers. Look for properties with large windows that are either North facing, North-East facing or West facing.
Ideally, your property should be situated in a convenient location. This means it’s close to parks/beaches and good schools. It’s accessible via public transport – trains, ferry’s, light rail and buses. Plus, it’s comfortably close to good lifestyle amenity including shopping, cafes, restaurants and the like.
Examples of great areas to invest
When using the fundamentals as the guide;
Inner west – Stanmore, Summer Hill, Lewisham, Dulwich Hill – these areas are predominately medium density, have train and light rail access, good amenities and good schools
North of Wollongong CBD from North Wollongong to Coal Cliff – these areas are close enough to Sydney by train, have less high-rise development, hospitals, universities, beach access, good amenity and schools
South East QLD
Gold Coast south of Broadbeach and the Gold Coast CBD – these areas are affordable, have enormous rental demand and are close to the airport, good amenity, schools and beaches
We’re here to help
As always, if you could use personalised guidance and expertise on your next purchase in Sydney, the Gold Coast or Northern NSW markets, get in touch with us today.