When buying an investment property it is important to purchase one that will be in high demand and receive premium rent. From my experience as a property investor and as a Buyers Advocate purchasing property in Melbourne, I can honestly say that there is no one hard and fast criteria to use as a guide to buying a property for rental that works across every suburb and every state. Each suburb we purchase in has it’s own set of unique preferences and as Buyers Advocates it is our job to understand the subtle shifts in demographics and what matters most to potential tenants (and homebuyers) in each suburb.
This week we follow the journey of one of our Buyer Advocates, Melinda, who is currently searching for a rental for herself, her two girls and her fur baby.
“It was an interesting experience inspecting properties with a tenant’s hat on, rather than the “buying hat” I usually wear when inspecting properties for our clients to purchase. Things I thought would matter most didn’t, and things I never thought would be high on the list were”
Let’s take a look at the surprising results so you can start viewing properties through the eyes of your potential tenants. Understanding these insights will help you choose appropriate assets which will rent fast and for top dollar.
Here are Melinda’s highest priorities
1. Bedroom Sizes
With two children approaching their teen years, size of bedrooms matters. If a 3rd bedroom was 3m x 2.5m it was too small for a family with children who were in or about to hit their teens. A good bedroom size for families with older kids is a minimum of 3m x 3m.
There are areas and property types where a 2.5m x 3m bedroom would be acceptable. Which proves that it is important to understand the demographic of an area and who is likely to rent the property you are considering buying as an investment.
Busy professionals want a dishwasher. Ain’t nobody got time to hand wash dishes these days!
3. Heating and Cooling
Melbourne is cold, heating is a must when you purchase a property to lease in Melbourne. When a property doesn’t have sufficient heating the number of inquiries are reduced which leads to a lower rental return. Equally important, particularly in the western suburbs of Melbourne where it gets very warm, is cooling. In some suburbs, adding a $60 fan can add $5 – $10 pw more to a property.
4. Built In Robes & Storage
Storage is often in short supply for rental properties. Older houses in particular can be lacking in bedroom, bathroom and kitchen storage. Along with this many homes in Melbourne do not have a garage.
Including a small shed on your rental property can make a huge difference when it comes to meeting the needs and desires of your tenants. Also, building additional shelving and storage in the bedrooms, bathroom and kitchen will always be a hit. You can never have enough storage.
As a single parent with two children, it was important to Melinda to have her girls bedrooms close to her own for security purposes. This priority is unique to Melindas circumstances and there would be other families who would prefer the children’s bedrooms away from their own or in their own wing, and for tenants sharing with house mates a separation of the bedrooms is considered a positive.
It is important to understand the demographic of the area you are purchasing in for investment purposes so that you can choose the right property for the target rental demographic in the area.
Three Surprising Results
Melinda expected to be more concerned with security.
TIP – Safety is usually very high on the list from our female home buyers, and this is the same for female renters.
When purchasing an apartment in Melbourne, be mindful that ground floor apartments can be considered unsafe with female renters. Look for an apartment that has security access. If a ground floor apartment is on your hit list, find one that cannot be accessed easily through the windows or exposed doors. For example, a fenced in courtyard would provide the security a female renter would desire.
2. Kitchen and Bathroom Presentation
While everyone loves a gorgeous new kitchen and bathroom, many tenants won’t pay more for the luxury. So long as both are functional, safe and feel clean, most tenants are more forgiving of an outdated bathroom in inner city locations. Location often overrides pretty finishes in the inner suburbs of Melbourne.
When selling a property, it is important to note than in many instances a buyer will pay more for a newly installed bathroom and kitchen. Therefore understanding your strategy and timeline play a role in your asset selection.
TIP – In newer estates and house & land type suburbs in the outer areas, there is a higher expectation for the bathroom and kitchen to be very well presented and near new. The newer the finishes, the better in these locations.
3. Floor & Window Coverings
Melinda wasn’t concerned with the floor coverings and window furnishing because the other items on her list were of a higher priority to her. Whilst this is a personal decision, we know from experience that new or near new window and floor coverings typically command a higher rental return and lease faster.
Whilst this is true a lot of the time, it isn’t always the case. So it is important to conduct adequate research and ask for advice from local property managers.
Finding The Property Tenants Want
When purchasing an investment for our clients we have an index of items we look for to ensure the property meets the investors needs and will hit the right tenant demographic. There are subtleties of the criteria that does change dependent upon the region in Melbourne we are buying in, the suburb and our client’s overall investment strategy.
As a smart property investor it is wise to understand the foundation items that are a must in every property as well as the unique and subtle variances for tenant and buyer preferences in each suburb you consider.
Sticking to a blanket approach and the same checklist for every suburb will delay your results and keep you out of the market longer. Learn to be fluid in your approach and adapt to the playing field you are playing on.
If you would like help to select a suburb and property type to meet your investment goals and investment strategy our team are available to assist. With the resources we have access to and the databases we have built ourselves, coupled with our unique approach to choosing an investment property in Melbourne, you can have your shortlisted suburbs and know exactly what property type to target within a week of speaking with us. Buying a property can be really easy with a little help on your side.
Let’s get together
Ready to discuss how we can make home buying or investing in property a breeze for you? Fill out the form below and our team will be in touch with you shortly.