How to choose a home that will be a good investment
Being a first home buyer is no easy task. The sea of processes and procedures can be overwhelming and stressful. For people wishing to enter the property market, a common question is “should I buy an investment property, or my first home?”. The answer depends on the purchaser’s long-term financial goals. But is there a way to do both?
Four things to consider when seeking out your first property purchase
Location, location, location.
No surprises that the location of your property will play a big part in its long-term success. Research suburbs and locations with signs of strong growth in infrastructure, minimal unemployment, access to public transport and high capital gains.
Find the right price
Once you have found a suburb or area you are keen to invest in, investigate the median house price for the area. Whether the property is renovated or not does not matter at this stage, however if there is room for renovation or improvement it means there is greater scope to add value to the property. As a rule of thumb, it is suggested to consider properties within 10% of the median price which is a good way to know you’re not over-investing.
Future potential
When purchasing your first home, consider your situation in five years time, and how the property will appeal to as many people as possible – including buyers and tenants. Placing emphasis on the long-term investment potential will help you to decide whether to retain the property as a rental, or sell and reinvest. Once you’ve determined these goals, certain features will become more important. For instance, access to public transport (namely trains) will be an attractive asset for renters, but might deter some buyers due to noise pollution.
Get the right finance
Speaking to a financial professional will help ensure that your loan is tailored to your long-term property goals and objectives. Understanding your cash flow, ongoing property costs and potential future rental yield will prove critical information when you decide to tenant or reinvest the property. Laying down the correct financial foundations at the beginning of your investment career will prove to be extremely beneficial in the future.
Like with any investment opportunity, it is advised to set out future goals and objectives before determining how to achieve these. Planning is key to ensure that in the future you can maximise value from your investment.
Contact CPS Property to discuss investment advice today.