Four Key Issues You Must Research Before Choosing Your Next Investment Home
In the investment property industry, it is a common story shared about the new property investor that thought he had done the right research on his investment home only to find that the investment homes he had been comparing were not of similar specifications and the consequence was that he lost out financially in a big way. There are four key features that your research must assess before you take the step in purchasing your next investment home.
All investors can be prone to making poor decisions and suffering a financial loss, but you can avoid this by simply researching the investment markets and the properties you are interested in.
Not only do you need to take the time to research (research ……. and then research some more) every potential property, but you must ensure that your research is comparing ‘apples with apples’.
Once you have decided on the appropriate estate for your investment, the most important facts to check are the building specifications of every potential investment property.
Key Issue 1: The most obvious issue that you need to be aware of are the size of the block of land and the square meter area of the investment house.
Advertising descriptions need to be read carefully and all aspects of the advertising carefully analysed and understood to minimize confusion. Let us take two real world examples and assess what they are offering:
HOUSE A: Bellevue Estate - $430,000 Location - Lot 21 Grandview Drive
This expertly designed 200 m2 home on a 720 m2 block in the Parklands Estate is an ideal family home. With an outstanding family room and an additional alfresco dining area off the family room, this will give your family lots of living space.
HOUSE B: Bellevue Estate - $400,000 Location - Lot 30 Petite Court
All hands up who want a massive 15 sq m outside dining area. If you live in the tropics, then who wants to live inside. This spacious 184 m2 home, situated on a 460 m2 block, is designed with this fantastic outside dining area, this is the Number One tropical home for the family.
Q1. Do These Descriptions Describe The Same Investment Home?
Q2. Will both of these Investment Homes Offer The Same Rate of Return?
Q3. Do they contain the same Features?
Well in reviewing the two descriptions you do find that they have common factors:
They are both in the same estate and have four-bedrooms, a main bedroom with ensuite and a double car garage, but these properties have very different rental appeal and financial growth potential.
When comparing these two properties and taking into consideration that one is a 200 sq m house on a 720 sq m block, priced at $430,000 and the other is a 184 sq m house on a 460 sq m block, priced at $400,000 – it’s easy now to see the REAL value!
Yes, it may cost you $30,000 more but look at the extra land value and house space you’re getting with HOUSE A compared to HOUSE B!
With this information on board, it is up to you to decide on your price point and investment philosophy.
I mentioned earlier there were Four Key Issues that you need to research when choosing an investment home and the First Key Issue was to look at the size of the property and also the size of the home.
Whilst there are many issues that need to be considered when choosing the right investment property, there are three other key issue points of comparison that should be considered and they are:
Key Issue 2: Assess the Nominal ceiling height – Be aware of the ceiling heights – do they vary. There is no industry standard and they can be from 2.5 to 2.7 meters. Building the ceiling heights .2 of a meter higher adds to the building costs and also to the aesthetic and practical appeal of your property to potential tenants.
Key Issue 3: Review the TURNKEY inclusions – this area varies a lot from building company to building company. Some of these are:
• Number of Power Points • Number of TV points • TV antenna • Number of Phone Points • Dishwasher • Venetian blinds to windows • Letter box • Remote control garage door • Automated irrigation systems • Security Screens on windows & external doors • Turf & landscaping • Fences • Sealed Driveways
Key Issue 4: Assess the Building & the Quality of the Fixtures and Fittings – The quality, guarantee and warranty vary greatly in today’s market. It is essential to ask the question and ensure that you always receive documented evidence of the guarantees and warranties provided by the building company.
With a home investment property, ‘added extras’ will translate to a higher rental return but always ensure to calculate the value of the extras vs the rental return into your financial planning.
Never rush into buying your investment home. Always take the time to consider all the factors impacting on you potential investment and this will ensure that you will make the right decisions on what to buy and improve your potential return on investment!
About the Author
North Haven Homes is one of Australia's premiere builders of new homes and investment homes. To find out more about buying a new home or an investment home simply visit Townsville New Home Builder or to see their current range of new home packages, simply visit Townsville House and Land Packages
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