Buying an investment property is very different to purchasing a home and there are a number of factors to consider when you complete your your due diligence.
First and foremost, you need to find out “how much the property will rent for?”. In addition to this, if you make any improvements to the property, how much will they cost and how much will they increase your rental yield? Stacking up the numbers is very important factor in purchasing an investment property and really should be viewed as your number one priority before doing any further due diligence.
In establishing rental yields, be sure to call on a professional property manager to find out the most accurate market rent. Property managers are well-versed in local rental markets, and will conduct a thorough market analysis that considers factors such as comparable rental properties, neighbourhood trends, and current economic conditions. We, at South Property Management can provide you with a free rental appraisal.
Other matters to consider when purchasing a property include:
- Supply and demand. For example, if you purchase the property how long will it be vacant before you tenant the property?
- What type of industries are in and around the property you are looking to purchase? Are there any long-term industries within that area that don’t look to be moving on anytime soon, i.e will the tenancies flow or could the demand dry up in the near future?
- Is the property healthy homes compliant or will you need to invest additional funds to make it compliant?
- What and how much future work or ongoing maintenance will be required? For example, will it need new carpet and paint? Keeping in mind that investing in properties is typically a long game, not a short one.
- What type of wiring does the property have? Is it up to scratch and if it isn’t, how much will it cost to update and keep the property safe?
- Are all the appliances at the property operational, for example; ovens, dishwashers, heaters etc.? Don’t assume these things are working “check them”, you may just kick yourself if you don’t.
If you are looking to purchase a rental property in Dunedin, we can provide you with a free rental appraisal. Simply fill in our appraisal enquiry or email us at info@southproperty.co.nz. We’d love to assist you.