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How to choose the right investment property
Get the lowdown on location, property type, investment strategy, and who to trust with your money.
Making an informed decision
Investing in property is a big step towards building your financial future. To make smart choices, think like an investor: define your goals (long-term growth? steady income?), understand the market, and choose the right property type. Most importantly, seek expert advice from financial planners and property managers. Their expertise can help you make informed decisions and maximise your returns. After all, securing your financial future is worth it.
Artist impression only
Location, location
Location is key for a successful property investment.
When finding the right investment property, seek areas with strong tenant appeal: good schools, shops, parks, transport, and a safe community feel. These attract long-term tenants and lower vacancy rates.
Consider future growth potential too. Areas with planned infrastructure or undergoing development often offer great returns. Up-and-coming locations can have higher growth potential and rental yields, especially those with growing populations. Do your research to learn more about vacancy rates and target areas with high rental demand. A well-chosen location helps set your investment up for success.
Established homes
Pros
- Character and charm: Older properties often have unique features and character that can be appealing to tenants.
- Track record: You can see the property's rental history and how it has performed in the market.
- Existing infrastructure: Established areas often have mature infrastructure, including schools, shops, and transport links.
- Potential for renovation: You may be able to add value to the property by renovating or making improvements.
- Quicker move-in: You can usually move in or find tenants more quickly with an established property.
Cons
- Higher maintenance costs: Older properties may require more extensive maintenance and renovations, potentially impacting your rental income.
- Limited depreciation benefits: Depreciation deductions may be lower compared to new properties.
- Outdated features: Some features may be outdated and require upgrading to meet current tenant expectations and legal requirements (e.g., energy efficiency, heating, and cooling).
- Competition: Established properties in desirable locations can be highly sought after, increasing competition.
New property
Pros
- Lower maintenance: New properties typically require less maintenance in the early years.
- Modern features: Enjoy modern amenities, appliances, and energy-efficient designs, which are highly appealing to tenants.
- Energy efficiency: Lower energy bills due to compliance with regulated energy efficiency standards, making the property more attractive to tenants.
- Depreciation benefits: Claim higher depreciation deductions on the building's structure and fixtures, including a 2.5% capital works deduction per year for 40 years.
- Warranties: New builds come with warranties for appliances and construction.
Cons
- Less certainty: It can be harder to predict rental demand and capital growth for new developments.
- Delays: Construction can be delayed due to weather issues or labour shortages.
- Defects: New properties may have minor defects that need to be addressed by the builder.
- Depreciation declines over time: The value of depreciation deductions decreases each year.
Ultimately, when choosing the right property, the decision depends on your budget, investment goals, and risk tolerance. If you prioritise steady cash flow and lower maintenance, a modern property might be the better choice. However, if you're drawn to unique features and willing to invest in upkeep, an established property could offer long-term value and character appeal.
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NSW, Macquarie Park
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Midtown is a diverse urban neighbourhood with parks and playgrounds, new education and facilities, all just 15km from the CBD.
World-leading 6 star sustainable community.
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995,000
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All opinions, estimates, forecasts, links to external websites, conclusions and recommendations and underlying assumptions contained within this webpage are made and expressed by Frasers Property Australia in good faith, in the reasonable belief they are correct and not misleading as at the date of publication. This publication and its content do not represent financial or other professional advice and should not be regarded as such. Before acting on any information provided, you should fully consider the appropriateness of the information, having regard to your objectives, financial or taxation situation and needs and, if necessary, seek appropriate professional advice.