Investing in real estate can be a profitable venture, but it comes with risks. To ensure you don’t end up with a bad investment property, follow these expert tips and strategies from professional property advisors.

The golden rule in real estate is all about location. David Morrell of buyers’ advocates Morrell and Koren emphasises, “The real estate rules are very simple: position, position, position. When you vary that, the risk profile gets larger.”

Property advisor Kate Hill of Adviseable agrees, noting that location is even more critical than the type of property you’re buying. “It’s much better to buy something imperfect in a great area, as it will still grow in value, than a perfect property somewhere that isn’t so good. Then, it will never do anything.”

When selecting an investment property, consider its appeal to future owner-occupiers. Julian Fadini, founder of investment advisors PRPTY 360, points out that the market is predominantly made up of owner-occupiers. “So, whatever you’re buying also needs to be suitable, in the long run, when you come to sell, for owner-occupiers.”

Morrell warns against buying property off the plan if you’re an investor. He explains that you’ll likely pay 10-15% over the true value to the developer, putting you at a disadvantage from the start.

Instead of investing in another property, Morrell suggests upgrading your principal place of residence. “If you buy an investment, then the tax office will take half your proceeds, but if you put that money into your own place, then you’ll keep it all,” he says. Investing in your own home yields significant tax benefits in Australia.

Before committing to an investment, ensure you can afford it under all conditions—whether interest rates or the cost of living rise or fall. Hill advises, “You need to be able to afford to hold it rather than being forced to sell it in a couple of years because the yield isn’t right or for personal reasons. An investment is for the long term rather than the short.”

Performing due diligence is crucial. Hill stresses the importance of ensuring there’s sustainable demand for property in your chosen area. Morrell adds that investing for capital growth rather than income is key.

Fadini advises knowing the median price of houses and apartments in your target area to avoid overpaying. Additionally, check vacancy rates. “If your area has a vacancy rate over 2%, then you could probably do better,” he says.

For apartments, always conduct a strata check and pest inspection. For houses, a full building and pest inspection is essential to ensure structural soundness. Fadini also recommends talking to the local council to verify that future developments won’t negatively impact your property’s value.

Not sure where to start? Reach out to our team at info@createvic.com.au or submit an enquiry through our contact page.

Source: Domain – How to Avoid Buying a Bad Investment Property