When you?re looking for your first or next investment property, you?re probably trying to approach each inspection through your potential tenant?s eyes.
Will people want to live here? Will they pay a premium rent for these particular features and amenities? Will they love it so much that they stay long-term, saving you the bother and expense of advertising for new tenants? And of course, how much of a return will the property pay?
These are all valid and important questions. But unless you plan on holding onto the property forever, eventually you?ll need to sell it. And it might surprise you to learn it will more than likely be a homeowner, not an investor, who takes it off your hands.
Contrary to what media would have us believe, the real estate market isn?t dominated by investors. Most people out there actively in the market are actually buying homes to live in ? investors don?t have anything near a monopoly over the Australian property market.
In fact, owner occupiers drive the market, as they comprise 70 per cent of buyers. So, it makes sense to look for properties that appeal to these buyers ? otherwise you?re narrowing your pool of sellers and potentially sabotaging your capital growth.
Buyer?s agent Brady Yoshia says that considering owner occupier appeal is important when purchasing any property, be it to live in yourself or as an investment.
?From an investment perspective, to attract high-quality tenants the property needs to meet their desired lifestyle and accommodation needs,? Brady advises.
?Tenants are more discerning than ever, and if you wouldn?t like to live in the property due to its condition or location, other people will no doubt feel the same.?
Brady says that this applies to both tenant and future owner occupiers, and also suggests that it?s a good idea to consider how you?d feel personally about living there, just in case you find yourself in the position where you need to move into the property down the track.
So, how do you identify such a property?
Brady says there are a number of features that owner occupiers will be on the lookout for, including:
- Location and aspect of the home
- Access to public transport options
- Potential for future growth
- For houses, the size of the block
If you?re thinking of buying a very unusual property, perhaps because it?s on the more affordable side or because it meets your unique requirements, then consider whether this will appeal to future buyers ? or are you potentially selling yourself short?
Beyond these factors, Brady says it?s important to know what?s happening in the area, from a development and population growth perspective ? for example, are there any significant infrastructure upgrades planned, which might affect access or liveability? You can also enquire with the local council to find out if there are any large-scale development applications in the pipeline.
When imaging your future buyers, consider all the possibilities ? professional couples, young families, and even retirees and downsizers. Shops and essential amenities like doctors, banks and Centrelink offices should all be relatively easy to get to, along with at least two options for commuters, such as a main highway and a train station.
?Areas that have owner occupier appeal are usually within the catchment area for good schools,? adds Brady; you can find maps online that will show you where these boundaries lie.
Public transport and access to universities and commercial hubs and proximity to hospitals are also important, with areas such as the CBD, Parramatta, Chatswood and Macquarie Park in Sydney all being good examples of suburbs with both owner occupier and investor appeal. In Melbourne, houses near coveted schools such as Box Hill High and Balwyn High are always in demand, along with anything in the sunny bayside area.
But regardless of the specific city, keep in mind that it is owner occupiers drive the market. If you want a property that has wide appeal now and in the future, then it pays to keep both renters and homeowners in mind when shopping for your next property investment.
Louisa Sanghera is a Finance Broker for Residential Mortgages, Vehicle and Asset Finance, Commercial Lending and Budgeting and Cashflow Coaching with Zippy Financial.
She has gained more than 30 years in the Banking and Industry, and since founding Zippy Financial, has become a multi award nominated expert in the field of finance featuring regularly in industry press and speaking at finance and investment seminars across the country.