When it comes to investing in property conventional wisdoms win out every time:
- The law of supply and demand and the economic imperative of being close to the CBD gives purchasers of terrace houses in the inner city superior capital growth. Look at Redfern, Surry Hills, Newtown, Marrickville, Camperdown, Darlinghurst, Erskineville, Alexandria and surrounding areas for the best opportunities
- Investing in a unit will often deliver a higher rental return and a longer prospect for capital growth. Apartments generally incur less maintenance costs than a terrace house.
- Choose a property that is close to public amenities and infrastructure; for example Redfern Station or the Central Rail and Bus Junction, as well as shopping centres such as Broadway or Marrickville Metro.
- Infrastructure projects are often key drivers for future rental demand. Get in at the ground floor and buy a rental investment property before the project starts. This will often allow you to capitalise on increased demand and consequently improve your capital return.
- Focus on natural light, ventilation and storage space as opposed to being influenced by fixtures and fittings such as tiles in the bathroom or quality of appliances, which can be updated.
- When purchasing a house, consider the size of the block. Size is a key determinant of value. When purchasing a unit, take note of the floor space.
Making a Property Inspection
Once you have short-listed a number of properties it is important to compare each of them objectively before you begin to make a final decision.
Here is a checklist:
- Get a feel for the local environment by familiarising yourself with the area. Check on the availability of public transport and the proximity of shops, schools, parks and other services. Talking with local residents will provide extra insights.
- Go to as many real estate auctions and open houses in the area as possible to get a feel for what’s selling, at what price, and why.
- Ask the agent about the potential rental income of the property.
- If the property has been rented before, check the tenant record to establish vacancy rates. Rental vacancy rates by postcode can also be checked atwww.sqmresearch.com.au
When Investing in a Strata:
- If you’re investing in an apartment, ask the managing agent for the rental history of both the apartment and the whole block. Look at the rental yields of other units and the capital growth history of the block.
- If you’re looking at buying a strata property, review the minutes from owner corporation meetings to understand how the property is managed and whether any strata issues have been raised.
- If you’re considering purchasing a property on a strata plan, be sure to review the sinking fund assessment. This outlines exactly what has been spent on the building and specifies any planned works. Properties on strata plans incur a monthly maintenance levy, which is deposited into a sinking fund and used to pay for expenses such as lifts, grounds and carpets. Review minutes of strata meetings to find out about any looming structural issues such as concrete cancer or broken lifts then check to see that the sinking fund will cover any proposed works.
- Ask for a community management statement to find out about the allotment of car parks and storage.