With the Reserve Bank of Australia (RBA) cutting the cash interest rate to a record low of 0.5%, we suspect there are going to be some great mortgage deals around in the next few months.

Now really is the time to think about buying an investment property!

Take a look at your finances and get your house in order. Once you’ve done this, speak to a couple of financial specialists so you realistically know what you can afford. You’re then ready for the step – start your research.

But where do you start? Here are five pointers to get you started:

What to look for in a suburb

Think about the area and location you want to invest in; and what makes a location desirably for most tenants? It’s not just about the school or the beach. Desirable locations have good public transport links, good amenities, (eg shops, medical centres and other services), and access to life style activities (eg parks, restaurants and entertainment).

Also look for areas experiencing growth – these may be a bit further out from the city or the next suburb along, but if you get in now, you may find you’ve bagged yourself a bargain a few years down the track.

Look at historical data and what’s planned

No-one wants to walk away from a sale with the feeling they’ve been ripped off, so before you jump in and start looking at any property within your price range in a certain location, look at bit deeper. There are many websites now offering historical sales data to help you get a real feel for what the market is doing in different areas. This means you can gage whether a property is over priced or not, and make a fair offer according to what the market is dictating – not what the vendor is dictating!

Also check out what the local council is doing – is it planning to invest in infrastructure to make the area more desirable? Again, if the council’s 5-year plan involves a major regeneration project, it might be wise to get in now before the property prices increase.

Considerations for the type of property

There are lots of different types of tenant, with lots of different wants and needs; a family of four will probably have a different ideal property ‘tick list’ compared that of the single professional person; there really is no ‘one property fits all’ solution!

The ideal property very much depends on your budget, and what type of tenants you want to attract.

Generally though, tenants are attracted to low-maintenance gardens, properties with an easy layout and storage space, and one which is secure.

Check your return of investment

On the face of it, you may think you’ll get a great return, but there are a couple of things you need to think about.

• Ongoing costs

There are ongoing costs associated with property investment, such as council tax, strata fees and water bills. These all need to be factored in when you’re looking at what income you can earn from the property. Many investors look to using the 50% rule when they’re considering buying a new investment property – in a nutshell, once expenses have been accounted for,  the landlord will get 50% of the income.

It’s worth noting at this stage, some people do choose to work at a loss (ie be negatively geared), as this means they can claim the loss against their tax bill.

• Capital gains

The other thing to think about is capital growth. While we can’t predict future, look at the historic property prices and see how much they have gone up (or down!) in the past few years; the canny investor will generally look for capital growth as well as the returns they get on rent.

Choose the right partners

If you’re buying a property for the first time, it’s important you have the right specialists around you. These include the right mortgage broker, an accountant who knows what tax-deductible expenses your can claim, and of course, we suggest to make your life easier, the right agent to manage your property.

For what does make the perfect property, call us on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or better still, come into our Cardiff office so we can talk more.

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