How to Pick a 5-Star Investment Property

One of the unique services offered by Great Investment Properties is our property Star Rating System. We believe in absolute transparency in all our work, so we provide an accurate appraisal of investment properties by assigning them a star rating.

The benefits of this system to you are:

• You understand what you’re truly investing in
• Provides a better indicator of future capital growth
• Gives you a realistic budget range for finance purposes

At Great Investment Properties we only recommend investment in properties rated 3.5 stars or higher, this is to ensure positive capital growth and solid investment strategy.

How the rating system works

As part of our property assessment process we assess a number of critical facts which will impact the long and short term capital growth potential of a property. Some of the key factors considered include:

1. Location

There is a reason why the old saying in business is Location, Location, Location, it’s because it matters. Location is equally important when considering the purchase of an investment property. The first question we ask is will this location provide the best potential for capital growth?

Your investment property must be placed where people want to live and that the area will remain popular. At greatinvestmentproperties.com.au, we know if you get this right, you’re almost guaranteed long-term growth.

2. Design and Build Quality

The next important element to be assessed regarding property selection is it’s design and structural quality. While this may seem like an absurdly simple concept, it is amazing the number of properties that actually fail to hit the mark simply because of a minor shortfall in this area.

It is imperative that a properties floor plan is carefully examined to make sure the spaces are functional and suitable for long term residential use, before you even contemplate the purchase. In particular, pay attention to room size, natural light, ventilation, functionality, fixtures and fittings and storage space.

3. Rentability

Good properties in great areas means that your ability to attract and retain quality tenants will shoot through the roof. As a result, not only will your rent be higher, but your tenants will also stay much longer and you will ultimately achieve a bigger overall return on your investment. Just make sure you have a good property manager who will ensure that you are informed about the condition of your property and state of tenancy on a regular basis.

4. Return on investment

The primary means used to measure the quality of an investment property is the ROI or return on investment it delivers.

Your ROI is measured by a combination of the capital growth and your rental income. Your return on investment will depend on your investment strategy and which investment property you eventually decide on. Generally speaking, properties that provide a stronger rental income generally have lower capital growth potential. The purchase price of these types of properties should be low in order for the rent as a percentage of the purchase value to be higher. Unfortunately, the lower purchase prices usually mean that these properties are hiding away in lower quality areas, away from infrastructure or in a dilapidated condition.

So, if rental income isn’t the come all and end all of your investment strategy, a ‘premium property’might be a more suitable consideration. These properties tend to produce a much lower income based on the value of the property but over the long term, there is a much higher capital growth potential.

At greatinvestmentproperties.com.au, we believe balance is key – the right combination of capital growth and rental income over time is the best way to go. For this reason we recommend only brand new properties, thus ensuring that holding costs are minimized and rents are maximized in the early years of the investment.

Yes, cash flow and holding costs are both important elements of investment, but long term investment wealth is primarily derived from strong capital growth. And while new properties are usually sold at a premium price compared to established properties, the benefits are greater depreciation and much lower levels of required maintenance.

Moving Forward

Wealth comes for taking action and investing, so it’s important not to get caught up waiting to find the perfect property that ticks all the boxes. These types are extremely rare. While you don’t need every box ticked we strongly recommend that you don’t consider any properties unless it achieves at least 3.5 on our star rating system.

For further information, please Contact us today.