It is more important than ever to get property fundamentals right

With global financial markets dipping and diving on an almost daily basis, the safe haven of a quality, well-located residential property is once again proving an appealing option for investors.

However, don’t for one minute think a real estate investment is a licence to print money, and in these uncertain times, it is more important than ever to get the fundamentals right.

An investment property should tick a number of boxes for you and prospective tenants. For starters, its location is paramount. Look for investment homes that are close to shopping, schools, hospitals and recreational facilities, and if they’re in walking distance, even better. Tenants must be able to get to work as quickly as possible, so access to motorways and railway stations are other valuable features to look for when buying an investment home.

Also, if the budget allows, a newer property purchase will provide decent depreciation benefits, which is helpful when times are tough. A new home or apartment will usually (but not always) have fewer maintenance issues, which can be a great cost saving.

Likewise, investment homes in locations with traditionally low vacancy rates (which means tenants love the suburb or town) can provide a level of investment security and cash flow.

Choosing the right managing agent is also an important consideration, especially when the chips are down. In other words, you want an agent who represents your interests, but not to the detriment of the tenant. The right property manager will have a policy of conducting regular rental reviews (every six or 12 months preferably) rather than just when tenants vacate a property. This can help maximise your returns so you are assured you are receiving market rent.

As a guide, looking at the current average rent for similar properties in the area is a good way to calculate the weekly rent for your property – your managing agent can give you an up-to-date appraisal, or you can refer to websites such as RP Data, Australian Property Monitors or PriceFinder. But any rental increases you do make should be gradual, rather than a one-off spike which your tenant/s might find hard to swallow.