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Property Investment

Things to consider when building an investment property portfolio

27 July 2023

Investing in property requires careful planning and execution. While you should always seek the advice of professionals before making investment decisions, here are some important considerations if you’re thinking about property as an investment.

 Location, location, location!

While there’s no foolproof method to pick a location on the rise, here are some tips that may point you in de the right direction:

  • Keep an eye on recent sales – Popular real estate websites can provide detailed reports on suburbs’ recent sales data.
  • Compare supply and demand – Be aware of the number of building projects in the area. Lower rental yields could follow if many new units come onto the market.
  • Look for signs of gentrification – Trends come and go, but when an area moves from dated to ‘hip’, the price of property often ticks upwards.
  • Watch what’s on the horizon – Big infrastructure projects can make areas more or less appealing. Scope out upcoming developments to stay ahead of both opportunities and risks.

Understand rental yields

Rental yield is a measure of the income your property generates every year as a percentage of its total value. It can change regularly depending on a range of factors, including increases or decreases in your rental income, as well as changes in your property value. 

Understand what’s important to local renters

When looking for the right investment property to put your money behind, seek out features that are attractive to as many people as possible. Some things to keep in mind are:

  • Consider the property layout and aesthetics – Think about the profile of typical renters in the area (e.g. young singles, families, etc.) and whether the property will be a place they’ll be happy to call home.
  • Look for “x-factor” features – If your investment includes something extra like a communal rooftop or a lock-up garage, it could appeal to various renters. 

Consider the underlying value of the land 

While your regular repayments can give you an idea of what your property was worth when you purchased it, figuring out the value of the land you’re sitting on could be valuable to understand.

Hire a professional to help you evaluate land value

Appreciating land values can often be challenging to pin down. A professional appraiser can help you understand the land’s value separate from the dwelling’s value.

In hiring an independent appraiser, you can be more confident of the value of the land you’re buying and its potential growth over time.

Compare similar land-only sales

If you don’t have the budget for an appraisal, you can compare similar land sales in your area. Look for a few recent land-only sales to calculate an average selling point.

By subtracting the value of your home from the average figure, you may produce a good estimate of the value of the land you own.

Consider all the costs of buying and ownership

Buying costs

The sale price for your investment property is just one of your initial costs. Other costs associated with a property purchase usually include:

  • stamp duty
  • legal and conveyancing fees
  • transfer and search fees
  • building and pest inspection reports.

Ongoing costs

These include:

  • repairs and maintenance
  • property management fees
  • home and landlord insurance.

You may also want to consider the costs you could incur if you decide to sell the property, such as agent fees and any potential capital gains tax.

Understand any potential tax implications

A tax professional can help you determine the tax implications associated with property investing. For example, depending on your financial situation, you may be able to offset the loss from an investment property against your taxable income.

Get expert home loan assistance 

Talk to a Suncorp Bank home loan expert about your options. For any home loan questions and assistance with your application, we’re here to help.

Home Loans are provided by Suncorp-Metway Ltd ABN 66 010 831 722 AFSL No. 229882 Australian Credit Licence 229882 (“Suncorp Bank”) to approved applicants only. Please read the relevant Product Information Document, Lending Fees and Charges and Home Package Plus Terms and Conditions before making a decision regarding any Suncorp Bank products. Fees, charges, terms and conditions apply and are available on request or on our Product Information Documents and Forms page.

The information is intended to be of a general nature only and any advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.