Why Location is an Important Factor When Investing in Property

If you’re looking at property investment, two of the most important factors for your consideration should be high growth rates in property values and relatively high rental returns.

Many people naturally assume the best investment properties are located in areas where there are high growth rates in property values.

However this isn’t necessarily the case as it neglects to include the importance of rental returns.

Contrary to popular belief, most property investors are average income earners who own one or two properties and primarily invest in property to boost retirement savings.

They also generally need to borrow funds for their purchase, meaning there is a limit to how much they can afford to pay for their initial investment. It also means that higher rental returns will significantly assist with loan repayments and take much of the financial burden of owning another property off of the investor.

What is a reasonable rental return for an investment property in Australia? In the main capital cities and regional towns, the gross rental return for new investors purchasing the median priced house or unit and receiving the median rent is now between four and five per cent.

Before jumping into purchasing an investment property, take the time to investigate all possible locations of interest.

Remember, what makes an attractive home doesn’t necessarily make an attractive investment property proposition, so be clear to differentiate between the two sets of priorities before making your choice.

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