How Do You Pick an Aussie Property to Invest In?

Investing in real estate provides investors with many potential income streams, making it one of the most coveted options for growing their finances. If you want to pursue this option in the Australian real estate market, it’s important to know your goals, understand the local market, and do your research. All these apply, whether it’s a commercial building or build to rent in Sydney that you want to invest in.

What makes Australia an attractive real estate market?

When it comes to real estate investments, Australia’s stable and strong market holds a strong appeal. It doesn’t hurt that the government supports the property development sector, market growth.

• The growing population and high migration rates equate to more housing demand.
• The low supply of housing, especially in capitals, pushes high demand, providing investors with a lot of room to explore.
• The strong and stable economy supports long-term investments.
• Rental demands in business districts and employment hubs are high.
• Tax benefits from negative gearing, interest expenses, depreciation deductions and the like.

Most importantly, the Australian property market continues to grow with expanding student housing, regional developments, and build-to-rent options.

Understanding your investment goals and strategy

Before you commit to any property or investment opportunity, it’s important to know the reason why you’re investing. The fundamentals of financial investment dictate that your financial goals and property choice must match.

• Capital growth vs. rental yield: One is geared towards value appreciation, while the other provides a steady income.
• Short-term or long-term: Decide if you want to hold the asset for several years or earn a quick profit from it.
• Risk tolerance: Are you a conservative or high-risk investor? Your answer will influence what property you buy and its location.
• Passive vs. active involvement: This refers to the role you want to play in handling or managing the property. You can manage it yourself or completely hands-off.
• Type of property: Every property, be it residential or commercial, has its own potential risks and returns.

Financial Considerations and Due Diligence

To ensure success in property investment, careful preparation and thorough assessment are key. The funds you put in should have good or higher returns, not the opposite.

• Make sure your budget covers property cost and ongoing, and future expenses. Apart from legal fees and stamp duty, you’ll need to pay for insurance and council rates.
• Carefully calculate the rental yield each year against the property price.
• Study the market, especially the vacancy rates and the average rental fees in a specific area or neighbourhood. You should also look into a location’s past performance and future outlook.
• When taking out a loan, make sure to identify the loan structure most suitable for your specific situation. Consult a financial advisor or mortgage broker for the best outcome.
• Never skip building and pest inspections, as these will save you from expensive problems that will jump on you after you finalise a deal.

When investing in property, your success hinges on fully understanding your goals, doing your financial due diligence, and knowing the real estate market. A solid understanding of the fundamentals will help you make smart decisions for guaranteed returns. If you want to explore build-to-rent investment options, BTR Group is the company to call.