Buying an Investment Property

We're always hearing about the great financial benefits of owning an investment property, but how do you go about getting a piece of the action? Real estate expert John McGrath has some suggestions:

• Get ready and do it now. The real estate market is going up and up.
• Buy at about the median price for the area. That’s the most saleable down the track when you decide to sell.
• It doesn’t matter whether the property is old or now, it's the quality of the building that is important. An older style property gives you more growth, but a new property has better tax depreciation for you as an investor.
• The best size apartment to buy is a 1 or 2 bedroom. A studio or 3 bedroom apartment is harder to rent and doesn't give you quite as good capital growth at the end of the investment.
• You should expect a return of 5-6% on your investment. That means the rent at the end of the year should equate to about 5 or 6% of the value that you paid for the property.
• When choosing an area, go for somewhere with an established track record of growth, or where there is lots of buyer activity that is likely to outperform the market in the next few years.
• And finally, once you’ve done your homework, go out and enjoy the process. Finding an investment property can be lots of fun!