Get your head around a good investment.
Whether you’re a seasoned investor or a first-time buyer, finding the right investment property is key to success. But what exactly makes a good investment property? There are so many factors to consider, it can be hard to know where to start.
But fear not! We’re here to help you break it all down. In this article, we’ll take a closer look at what makes a property a good investment, from its potential for growth to how attractive it is to renters. With this knowledge in your back pocket, you’ll be ready to find the perfect property in no time.
1. Location, location, location
When it comes to investing in real estate, a prime location can make all the difference. Properties in areas with a bustling job market and steady growth are often the most in-demand and have the potential for better returns down the road.
Keep an eye out for these key factors:
- Convenience: Properties near shopping, dining, and entertainment options tend to be more appealing to renters.
- Easy access: Properties near major transportation hubs like airports or train stations can be in higher demand from renters who want a quick and convenient commute.
- Local schools: Properties in areas with top-notch schools can be a hit with families, leading to more rental interest.
- Stable economy: Properties in areas with a steady, growing economy are less likely to be affected by real estate market fluctuations and have better long-term potential.
With location in particular, it pays to do your homework. Think about both the current and future market conditions when choosing the right location for your investment property.
2. Reasonably priced – now, and in years to come
Affordability is a big deal when it comes to investing in real estate. You want to make sure the price is reasonable compared to other properties in the area and the rental income covers your costs.
When shopping for an investment property, keep an eye out for high rental yield – that means you’re making more money from rent compared to the property’s price. But don’t forget to factor in all the expenses that come with owning a rental property, like home loan payments, insurance, taxes, maintenance and repairs, and property management fees.
To get a good sense of affordability, it’s a good idea to work with a real estate agent or financial advisor. They can help you figure out the rental yield and see if the property fits into your budget. By being mindful of affordability, you can invest in a property that gives you a good return and helps you reach your financial goals.
3. Nice to live in, easy to repair
A property that’s well-kept and in good shape will attract more renters and cost less to maintain over time.Think about it – where would you want to live: in a property that’s falling apart, or one that’s in good condition? Well, the same goes for renters. A property that’s in rough shape can also be a black hole when it comes to repairs and maintenance, which can quickly eat into your profits.
When you’re checking out potential investment properties, take a good look at their condition. Make sure the building is sturdy, the appliances are working, and the place is ready for renters. By going for a property that’s in good condition, you’re setting yourself up for a better rental experience – and a more profitable investment.
4. A future full of potential
When it comes to buying an investment property, you want to look at the future potential of the place. Basically, you want to know if the property is likely to increase in value over time.
If you invest in a property in an area that’s up-and-coming, for example, you’re betting that the neighborhood is going to grow and become more popular. That could mean higher rental yields and increased demand for properties, which could lead to a rise in property values.
Another example of a property with future potential is one that needs some work or has room for growth. That could be a place that’s a bit outdated and needs some upgrades or a property with the potential for extra construction. By investing in these types of properties, you can potentially make improvements that increase the value of the property, and, in turn, your wealth over time.
5. Demand that’s steady & reliable
As you search for the perfect investment property, you’ll also want to consider rental demand. You want to have the confidence that people will be looking to rent in the location you’re buying into, and that you have the type of property that will suit those renters’ needs.
Properties near universities or major employment centres, for example, can be great investments because there’s typically a lot of demand for rental properties in these areas. There are always going to be students who need a place to live, and employees who need to live close to their job. This creates a steady stream of potential renters, which can lead to stable rental income for you.
6. Benefits when tax time rolls around
When you own an investment property, there are various tax benefits that can help boost your overall returns. If your investment strategy is focused around tax, you’ll want to consider depreciation as you search for the right property.
Depreciation is a tax-deductible expense that allows you to claim a portion of your property’s value as a tax deduction each year. The idea is that over time, properties tend to wear and tear and lose value. By claiming a portion of the value each year as a tax deduction, you can reduce your taxable income, which can help lower your overall tax bill.
It’s important to note that not all properties are eligible for depreciation and the amount that can be claimed will vary depending on the property and the circumstances. However, if you invest in a property that provides favorable tax benefits like depreciation, it can have a positive impact on your overall investment returns.