5 factors to help pick a great investment in Perth

“Typically, as prices increase above the median house price or around the $500,000, yields tend to decline. So, investors look for capital growth and yield, and in today’s market, an acceptable yield would be around 4 per cent with anticipated growth.”

What to look for when buying

1. Affordability

If property investors are looking to step into the Perth property market, Ms Joyce stressed that the affordability of the property should be thought of before all other factors.

“Investors need to consider affordability before they start the investment process. It’s difficult to dial down expectation if you start looking at real estate before you’ve established a budget,” she said.

2. Location

Following this, Ms Joyce then looked to location as another significant factor.

“Location is the most obvious factor affecting property values. The only thing you can’t change about a property is its location,” she said.

From location, she then said investors should focus on the economic aspect of locations.

“Low unemployment figures make an area pretty attractive because it provides a sense of security for individuals and families and, of course, strong rental potential for investors, which is important,” Ms Joyce said.

Also included in the economic aspect of location was government infrastructure spending on facilities such as schools, hospitals, recreational facilities and public transport facilities.

3. Human interest

Another important factor is what Ms Joyce referred to as the “human interest” factor of the area.

“What can I do in a suburb? What can I do on the weekend? On the other side of the coin, what will people think of me if I live here?” she said.

“The conversation piece is also the fact that some suburbs simply have a better reputation than others due to factors such as unemployment or high crime rates. Two homes or streets apart can differ substantially in value just because they’re in different postcodes.”

4. Owner-occupier appeal

Making sure the property has appeal to owner-occupiers is another important factor, one of which can contribute towards an investor’s eventual exit strategy.

“Another point is if the home is attractive to owner-occupiers, which is important, then it will be saleable when a market isn’t necessarily favourable to investors, so it means that you’re not beholden to the market, you can sell in any market,” Ms Joyce said.

“I think investors should potentially consider the land content. Typically, it’s the land that will appreciate in value.

“Another consideration is to consider the age of a property. There are advantages in new or newer homes when it comes to maintenance for example, so for an investment property, and again, how attractive it is for a prospective tenant.”

5. Capital benchmark

Lastly, Ms Joyce said that the capital benchmark of the property should factor into your decision.

“If you’re going to buy the most expensive property in your suburb, it’s going to take longer for you to gain capital growth in your home, so that’s worth thinking about as well,” she said.

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