What to Look for in an Investment Property

Many investors are drawn towards property investing for many reasons. The main reasons are the potential for long-term appreciation and immediate income through rental yields. However, not all investment properties are created equal, and investors must conduct thorough due diligence to ensure they make sound investment decisions. Whether you're a seasoned investor or a novice, here are some crucial factors to consider when evaluating an investment property.

Location, Location, Location   

The old adage holds true — location is essential in real estate. Successful property investors tend to look for properties in areas with strong economic fundamentals, such as job growth, low unemployment rates, and population growth. Additionally, consider factors like proximity to amenities, schools, public transportation, and major highways, as these can significantly impact rental demand and property values.

If you’re considering NDIS SDA property, it’s especially important to consider the accessibility of public amenities and transport, as well as the supply of NDIS support services in the area.

Market Conditions

Analyse the local real estate market to understand trends in property values, rental rates, and vacancy rates. Is the market experiencing appreciation, or is it stagnant or declining? Assessing market conditions will help you gauge the potential for capital appreciation and rental income.

Property Condition and Potential

Evaluate the physical condition of the property and consider any necessary repairs or renovations. A property in good condition may attract higher rental income and better quality tenants. However, properties that need some TLC may offer opportunities for value-add strategies and increased returns.

When it comes to NDIS investment properties, at Apollo Investment, we work with a team of specialised SDA architects and builders, ensuring top-quality properties to attract tenants and reduce vacancy risk. 

Rental Income and Expenses

Calculate the property's potential rental income and factor in expenses such as property rates, insurance, maintenance, utilities, and property management fees. To generate positive cash flow, ensure the rental income exceeds the operating expenses. It’s a good idea to seek assistance from a financial planner or accountant when it comes to calculating your after-tax return, as they can help you achieve the most tax-efficient result, whether you choose negative or positive gearing. Conducting a thorough financial analysis will help you determine the property's profitability and return on investment.

Because of the SDA payments from the Government, our SDA properties are cash flow positive. Please reach out to us if you’d like to speak to our accountant regarding the suitability of SDA property as an investment option. 

Long-Term Investment Potential

Look beyond short-term gains and consider the long-term investment potential of the property. Evaluate factors such as population growth, infrastructure developments, and economic diversification in the area. A property with strong long-term fundamentals is more likely to withstand market fluctuations and generate sustainable returns over time.

NDIS investment properties are eligible for the additional SDA payments for 20 years after registration. After the 20-year period, it is possible for the property to still generate a higher rental return because of the specialised nature of the property. There is also potential to earn a high return by using the property for short-term accommodation.

Diversification and Risk Management

To help reduce risk, many property investors avoid putting all their eggs in one basket by diversifying their real estate portfolio across different property types and locations. Diversification can help spread risk and minimise the impact of market downturns or unforeseen events affecting a particular market or property segment. For example, while the demand for commercial property decreased during the peak of COVID-19, the demand for residential and SDA property rose. 

We’re here to help

Investing in real estate requires careful consideration and due diligence. By thoroughly evaluating key factors such as location, market conditions, property conditions, financial metrics, and regulatory considerations, property investors can make informed decisions to build their real estate portfolio. Remember to consult with real estate professionals, conduct thorough research, and stay updated on market trends to maximise your investment success. 

If you’d like to learn more about investing in NDIS properties, please get in touch with us today. 

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