What to consider before purchasing an investment property

Investing in real estate can offer the potential for long-term financial growth and stability. But before you take the plunge into buying an investment property, there are a few things that you should carefully consider. 

Location and Demographics

We’ve heard it all before location, location, location. Location is paramount. Opting for an area that you are familiar with provides a distinct advantage, as your knowledge of the locality can help you gauge if it has potential. Begin by speaking with local real estate agents who have valuable insights into the area’s current and future prospects. Melcorp Real Estate can offer expert advice of the Melbourne property market and what areas are best for future investment.

Ongoing or planned development projects that may enhance the attractiveness and value of the property’s location is also something to think about. For instance, new shops, cafes, or infrastructure improvements could lead to increased interest from potential tenants or buyers. Similarly, developments that offer more job opportunities can impact the demand for housing in the area.

Capital Growth Potential

One of the primary reasons for investing in real estate is capital growth – the increase in property value over time. Assessing the capital growth requires a comprehensive understanding of the area’s dynamics. Consider the following factors: location, development opportunities, and transport links – good connectivity to transportation networks, such as highways, railways, and public transit, can enhance the appeal of an investment property. Easy access to essential services, educational institutions, and employment hubs can drive demand and subsequently increase property values.

Rental Demand

For many investors, renting out the property is a key strategy to generate income and offset expenses. Therefore, researching areas with strong rental demand is crucial to ensure the financial viability of your investment property. Be sure to study the local market to understand the demand and supply dynamics, look for low vacancy rates, a high number of rental listings, and a strong demand from potential tenants; anaylse potential rental yield; and understand the preferences and needs of the target tenant market such as proximity to schools, public transportation, shopping centres, and recreational facilities which can heavily influence your property to potential tenants.

For more insight on purchasing an investment property, start by checking out our current listings here.

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