How to Invest in Real Estate in Queensland

 If you are looking to add an investment property to your property portfolio, here are the factors to consider before you purchase.  

Unlike purchasing your family’s home, investment properties are purchased with the intention of making money from it. With the End of Financial Year fast approaching, now is the time to develop your investment portfolio. If you are looking to add an investment property to your property portfolio, here are important factors to consider before you purchase.  

Establish your investment goals and create a plan

Whether you are starting your investment portfolio or are already a sophisticated investor, it is beneficial to identify what your investment goals are so you can find the right investment property. 

The overall goal of property investment is to receive a return through rental income, which can represent a short or long-term investment opportunity. However, you should identify and set goals for yourself so they can be achieved. Like anything, setting goals can help you plan your long-term vision and map out how you are going to achieve them. 

Understanding where you are now and where you want to be will help you keep on track towards hitting your target.  Typical investment goals could relate to receiving passive income, early retirement and completing different type of development projects.  

Once you decide your goals, it’s time to work on your investment strategy. A strong investment strategy provides a clear pathway to make cash flow and capital growth from the property. An investor should connect their goals, personal situation and all future income requirements into the investment strategy. 

When creating an investment plan, here are some of our beginner tips to investing to consider:

QPG Big Tip: Although we all may have similar investment goals; it is important to remember that every property investor will have a different experience achieving them.

Finding the right Queensland investment property

You must decide if you are looking to build an off-the-plan property or purchase an established home.  

If you are looking to purchase off-the-plan, consider all the advantages and potential risks associated in this current market. Benefits of building a new home is the pricing, tax depreciations and option to customise. The risks associated with building an investment property could include unexpected delays and increased build costs due to shortage in materials. 

Established homes are convenient and often located closer to community infrastructure, especially in more condensed areas. These well-settled properties reside in areas with high demand areas with competitive markets, so you must be a strong contender to not be outbid.  

Once you decide whether you are buying new or existing, you must decide the type of home. 

Different type of investment properties include: 

  • House
  • Apartment
  • Townhouse
  • Villa
  • Dual Key
  • Dual Occupancy and;
  • Granny Flat. 

Before jumping into a purchase, you should consider what type of property will align best with what you want to achieve out of an investment property. For example, a house may have better capital growth compared to apartments and villas, but villas and townhouses are at a lower price point compared to houses and dual living homes.  

After you’ve decided what type of property you are looking for, it is time to weigh up its property attributes. A good investment property is one that caters to the needs of a future tenant.

As a landlord, the following attributes will tick the box for many tenants: 

  • Modern bathroom and kitchen
  • Air-conditioning 
  • Multiple bathrooms 
  • Adequate Car Parking Space
  • A Secure Premises – Secure locks, gates and windows that close properly. Security door will be a bonus! 

Choosing the location to invest in Queensland

The location of the home is very important. Take the time to research yourself into potential locations you would want to purchase in by looking at real estate channels, discussing it with family and friends, and contacting a local expert in the region.

Once you have chosen potential suburbs, there are 4 important factors to consider:  

  • Is it a high growth suburb?
  • Is it a high rental yield suburb? 
  • Is there a low vacancy rate?  
  • Is the suburb experiencing any growth in infrastructure? 

There are a few ways to determine whether a suburb is a high growth suburb. 

Examining the supply and demand ratio will provide insight on the suburb’s growth. If there are minimal new developments in the suburb but the demand is growing, the suburb is likely to experience growth as the house prices will likely climb. 

A property’s rental yield measures the difference between the income received from renting the property minus the overall cost of the investment. Rental yield is often measured as a percentage, and if the percentage is high, it often means there is greater cash flow and a higher return on investment. 

For example, if your investment property is receiving $450/week and you own a $400,000 property, the calculation of your gross rental yield would be 450/week x 52 weeks/ 400,000 x 100%. The total gross rental yield would be 5.58%. 

A vacancy rate measures the percentage of all available properties that are vacant or unoccupied at the time. If a suburb has a low vacancy rate, it means there is a high rental demand. It is important to review the suburb’s vacancy rate prior to purchasing to ensure it is somewhere future tenants might consider, without too much competition guiding them to apply elsewhere. On average, a very low vacancy rate is below 2%, which suggests it is a high demand location for tenants, but not enough supply.     

When purchasing an investment property, it is important to search the growth in infrastructure and any new happenings in the suburb you’re considering. New developments such as schools, highways, shopping centres or public transport may affect future property prices and are likely to boost the local economy and lifestyles. Areas of high growth will often see a rise in employment opportunities, which could attract future tenants to the area.

If you are interested in exploring your options as a property investor, click here and let us know. Alternatively, click here and see what your future in investment in property holds.  

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