1. Location, location, location

It might be a real estate cliché, but there’s a reason for it. If you’re planning to rent the property to tenants, you need to put yourself in their shoes. Is the house close to public transport, schools and other amenities like shops and restaurants? These factors might make the property more appealing to prospective tenants.

It’s also a good idea to get a sense of the neighbourhood’s general vibe. Have a look at other properties in the street. If they’re neat and tidy, it may increase the attractiveness of your own investment.

2. House, unit or a flat?

What type of investment property do you want to buy? Each comes with pros and cons, so it’s important to research and understand the best property type for the area where you’re looking to purchase. When it comes to an investment property, buy with your head, not your heart.

A small unit might be a cheaper option depending on the location. In areas close to the CBD or universities, a modern apartment might be more attractive to young people and students looking to rent. However, it may lack features like multiple bathrooms, a double garage or home office.

A standalone house with a backyard might be more expensive to purchase than a smaller unit initially, but it may attract families and fetch higher rents on average. However, a house usually requires more maintenance than a small flat or unit.

3. Get expert advice

Rental yield, negative gearing and capital gains tax – the world of property investment comes with a lot of financial jargon to wade through. Before you invest your hard-earned money, consider speaking to an accountant or qualified financial expert about your personal circumstances.

4. How old is too old?

The age of a property could impact your decision when making the purchase. Investment properties typically involve ongoing expenses and usually older houses require more maintenance than ones built recently. It does depend on the condition of the property, so it’s a good idea to check everything from the structure of the building to the bathroom plumbing and gutters. For peace of mind, get a professional building and pest inspection before you agree to buy the property.

5. Insure your investment

When buying a property, it’s important to consider getting insurance to protect the investment. If renting to a tenant, check whether your insurance policy covers both the building and things like tenant damage. Be sure to value your house correctly to avoid underinsurance and problems in the future if you need to make a claim.

Subject to limits and exclusions. RAA Landlord and Short Stay Insurance is issued by RAA Insurance Limited AFSL No. 232525. Consider the Product Disclosure Statement and Target Market Determination available from RAA before deciding whether to purchase this product.