What Dictates a Quality Property Investment

When purchasing investment properties in Perth, it is extremely important to have your priorities straight. Many people think that buying an expensive property in an “upper class” neighbourhood is the best recipe for success. If you have a lot of money to invest and a solid cash flow from business of other properties, if the numbers work out, that can be a good strategy.

However, the sad fact is that many investors miss out on great properties at very reasonable prices because they aren’t in the "kind of neighbourhood" in which they would like to live themselves. While we don’t hold hard and fast to any rules, the “rule of thumb” is that purchasing two $500,000 investment properties is usually a safer investment than one $1 million property, especially in the Perth market.

The Two Main Factors: Rental Yield and Capital Growth

Obviously, you aren’t going to want to invest in a neighbourhood that is run down, because it can quickly become an investment disaster. However, middle class homes with two or three bedrooms in suburbs that are primed for capital growth or provide great rental returns are an excellent investment.

Rental yield is important, especially if you are trying to create a bit of weekly income. At Investors Edge, we have access to a lot of statistics and we know the market extremely well. If rental yield is your main focus, we can help you find a property with a high yield.

However, capital growth is also very important and it is most crucial for those who are investing to ensure their futures. Our main criteria for capital growth are a healthy market, great infrastructure, access to transport and proximity to plenty of jobs. If a suburb has something very desirable in its near future growth plans, such as a freeway leading directly to the Perth CBD or a company that is getting ready to provide a lot of jobs, it can bring a big boost to demand to the area.

Affordability

Affordability is another important factor. We touched on it earlier in our opinion that two $500,000 homes are a better investment than one $1 million home. Affordability makes for an active market. You simply must be able to rent your investment property for a competitive price and keep your rental properties full with qualified tenants.

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