10 Point Property Selection Criteria
1. It should be new, or near new
To minimise repairs, to maximise tax depreciation and to maximise yield and growth.
2. Quality builders
Quality builders with a proven track record will ensure a smoother process, less problems and better quality tenants
3. Strong population growth forecasts
Strong demand applies upward pressure on yield.
4. Close to essential services
More renters will want to live there, thereby heightening competition and yield.
5. Approved by banks and insurance companies
We need to make sure that the lenders will lend to the maximum loan to value ratio in that area. More financiers’ means more potential buyers are able to buy there, which drives up prices.
6. High capital growth potential
Look for all the tell-tale signs of growth. Our research shows us where the fastest growing areas are.
Close proximity to the CBD – capital growth tends to be higher. Further out in the suburbs, it is lower.
Conversely, close proximity to the CBD – the yield is usually lower compared to the suburbs where it is relatively higher. (Yield is the relationship between the rent received and the value of a property.)
Regional areas that are booming can experience higher rewards with growth and yield due mainly to supply and demand, but can present higher risks.
So, we experience the phenomenon of higher growth coupled with lower yield or lower growth coupled with higher yield. Which is better? Neither – they are just different. What is better? To get the best outcome between yield and growth!
It is important for you to know all the facts, figures and research before making a decision. Buying a poor performing property can severely impact you future wealth.
7. High employment area
More demand from tenants and buyers.
8. In high demand by tenants
Look for medium priced properties that are in higher demand, this will increase yields.
9. Suitability for investors
Will ensure low maintenance and easier management.
10. Cash flow friendly
Higher yields increase your cash flow, thereby easing the process and allowing you to leverage further and faster.