Look for growth areas
The first step is identifying areas where the rental yield is rising. This indicates that an area is popular among renters. Another major factor is observing the demographics of people moving into the area. Suburbs, where the median age is around 35 or so, are likely to gentrify faster as these demographics tend to have better income and are therefore able to afford to rent more expensive properties. Another indication of a “growth area” is population. Population in itself is not enough to increase prices, but when combined with other indicators such as rising income and low supply, this is a good indication that property prices will grow in the area.
As well as looking at the current demand and supply factors influencing a given suburb, savvy investors buying with a long-term outlook should also consider an area’s future growth potential in their property selection. Future infrastructure upgrades, such as developing travel links, can provide an important catalyst for capital growth for a number of reasons, the first being the increased accessibility they offer.
Take Western Sydney Airport as an example – for a suburb region like Liverpool which has always been on the fringe of Greater Western Sydney, being in close proximity to the airport could help to attract future workers, in turn promoting a new wave of buyer demand (especially given the area’s relative affordability).
Do your Research
Our top five questions you should consider for every investment property are:
Jobs:What’s the employment situation like in the area?
Education:Check out the local schools, universities and TAFEs.
Shops:Is there a major shopping facility or centre nearby that will attract buyers? Or a shopping strip for daily goods?
Transport:Is there access to public transport like trains and metro? It’s also important to consider motorways that will attract buyers who drive.
Recreation:Are there parks and recreation facilities that would suit your ideal buyer?
Understand what tenants want
From the open-spaced interiors to the modern appliances, understanding what your tenants want will ensure that your yield is attractive. The key-word is future-proof. No tenants want to move into a property that needs maintenance or upgrades. Unlike 20 years ago, tenants aren’t looking for homes with the extra living room. They’re looking for well designed, well-maintained homes that are energy efficient and digitally advanced.
The key to understanding what tenants want is understanding where your buyer will be in a few years. Surveys indicate that renters will pay more for modern tech amenities, including smart home technology; as safety and cost savings are two of the most desired smart home benefits. It’s worth investing in a smarter, cleaner, more future-proof property that will last you for years to come and increase your rental income.