Tips to improve ROI on an investment property

Read: Investing in property on a low-income

When purchasing an investment property, there are a number of factors that could increase or reduce your potential return on investment (ROI). In this case it’s not just location, location, location.

When considering a property for investment purposes, an important question to ask is “will it be attractive to tenants?”.  But how do you know what will appeal to someone you’ve never met? Settling on a handful of locations is a good start. Young families and couples are typically the ones that drive capital growth so a location that is within a reasonable distance to schools, entertainment, transport and an employment hub is important. Other ideal factors are a low vacancy rate and relatively high rental yield.

Although location plays a major role, the quality of the home is also important.  You have to buy a homeowner quality property, because someone has to live in it.  And when buying an investment property, you also have to have an exit strategy, which could include selling to homeowners as well as investors.

You need to think about the demographic of renters who are likely to be living in the area. If you put a good quality, decent sized, one bedroom apartment in the inner city, it could be a great investment, however if you put it 30km out, it may not garner as much interest.

When investing in any kind of property, be wary of any danger signs. One of the biggest mistakes Australians make is not knowing what their cash flow is. Bad cash flow can be worse than paying too much for the property.  “It is vital to know how much your chosen property is going to cost after tax, every week after you settle. There’s no point in buying a top quality property if you can’t afford it.

Always be wary of somebody who tells you that their way is the only way to invest.  And lastly, buying for cash flow alone is flawed and buying only for capital growth is also flawed. You have to buy property that’s going to work for you.

When looking for a loan to purchase an investment property, ensure the expert you are dealing with is actually an expert. Not only can your Aloha Loans Mortgage Specialist find you a loan to suit your needs, but we can provide you with free Valuation and Rental estimate reports as well as put you in contact with trusted professionals in the property market who will talk you through their process.

Building your investment portfolio is important and we recommend that you have a great team of professionals around you to give you the right advice, including a Financial Planner, Accountant and Lawyer.  The Financial Planners at Riviera Wealth Partners are a good starting point to discuss your goals and give you advice on how to best reach your goals.

If you want to know more then please contact us on 02 9614 0888 or through our website

Don’t forget about our Cash Draw Give Away! Contact us to day and have us assess your eligibility for buying your new dream property!

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This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

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