Welcome to the 2nd part of our 4 part series titled: How To Inspect An Investment Property.
In this 4 part series on how to inspect an investment property we will take a look at:
- How To Inspect An Investment Property – Suburb Research
- How To Inspect An Investment Property – Inspecting The Street
- How To Inspect An Investment Property – Inspecting The Outside Of A House
- How To Inspect An Investment Property – Inspecting The Inside Of A House
The number one mistake first time and established investors make is to think they can understand an area by jumping on realestate.com or domain.com. While its important to understand what’s available online its far more important to understand the underlying drivers in a market and to do the right research upfront.
There are certain things to look for when inspecting a property that don’t involve the property itself, but rather the property surrounds, and the suburb.
Some great questions to ask when analysing a street are:
Is the house on a main road?
As a professional investor I tend not to buy houses that are on main roads. Properties that are in quieter parts of the suburb and away from busy roads tend to rent for higher prices, and are often vacant for shorter periods of time.
Is the house directly opposite a park?
Whilst it is good to have parks within close proximity to the property, its not advised to buy a house that is actually directly opposite a park.
How far is the property from Primary and High schools?
If the house is being bought as an investment, its good to be a short distance to local schools…that said you wouldn’t buy a property that backs onto a school. The sweet spot seems to be within 3 kilometres of the nearest primary school, and less than 5 km’s from the nearest high school.
How far away is the closest public transport?
Its always important to take note of where the nearest public transport route is when looking at an investment property. I don’t like to buy houses that back onto train lines, or that have major bus stops directly outside the front door. Whilst not all suburbs have their own train station, it is imperative that you buy a property that’s within close proximity of public transport. Ideally you want to buy within about 1 km of the near bus stop or train station.
How far away is the nearest local and major shopping centre?
It is always good to buy in an area that can meet your basic shopping needs, i.e. grocery store, local corner shop, newsagency, doctors, etc. It is also good to be aware of how far away your nearest major shopping centre is, with anything under 10km’s being a good distance. Also take note of whether the public transport route runs directly to the nearest major shopping centre.
How far away is the CBD?
Most savvy investors realise that capital and rental growth is the result of population and employment growth. Therefore long-term returns are achieved when buying within a 15 kilometres of a metro or major regional CBD. Whilst it is not imperative that you buy close to the major cities, it is often beneficial and more profitable in the long run to invest in areas that are close to the growing city centres.
Is the house directly under power lines?
We do not buy property that lies directly under power lines. I have seen professional valuers take $50,000 off the valuation of the property for being within 200m of a major power line.
Are the houses in the street well maintained?
When inspecting a property its important to take note of the surrounding houses. Are they in a good condition? Are they renovated?
Take the time to ask the agent the percentage of owner-occupiers to rentals in the street and the area. Streets that have a good amount of well-maintained properties are going to be more highly sought after to live in. It encourages the tenants who rent your investment property to look after it. And when it comes to re-sale of the property, it is going to be easier to sell your investment if the street it is situated in has a lot of renovated and well-maintained properties.
Finally, would you live on this street?
While its important to take the emotion out of an investment purchase it’s also important to decide if you would personally live on the street you’re planning to invest in.
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