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When you buy an investment property, who pays for it?
No, this isn’t a trick question but if you can answer it, you’ll have a better idea of the property you should be investing in.
If you get it right, your renter should pay the bulk of your investment property through rental payments. If you understand the renting population and what they’re attracted to, you’re half way to ensuring your property is rented out regularly and reliably. Different suburbs and regions attract different kinds of renters who will look for different features in a property and location. The kind of renter who is looking for a property in the inner city is likely to want different things than the renter looking for a property in the suburbs. Things like good cafes and funky bars within walking distance, a gym, shopping and public transport close by. However, someone renting in the suburbs, is more likely to have a family, want to be close to good schools, parks and playgrounds and within easy driving distance to shopping malls and employment hubs.
Furthermore, different cities have different renter profiles a broader scale. In affordable cities, like Brisbane where the average 2 bedroom apartment is under $500K within 10kms of the city, the majority of the renting population is under 35 years old. The reason being, in a low interest rate environment, it’s often cheaper to buy than rent. Research shows that there is strong correlation between the age of the renter and the desired age of the property. Meaning that younger renters strongly favour new properties. So it would make more sense to invest in a new inner city apartment in Brisbane than an older 3 bedroom house in the suburbs.
Conversely, if we look at another area of expected strong capital growth, western Melbourne towards Geelong, the renting population is more likely to be a young family who would favour a 4 bedroom house with a double lock up garage and a back yard.
If you have a clear understanding of who the renting population is and what they find desirable, you are half way to getting the type of property and the location right.
This micro research, forms a significant part of our research methodology, so if you would like us to do this for you, call us. Calla Property, 02 9016 2852.
