Property type and location
The location of your property and the type of property you choose to build is another key consideration as it needs to be attractive to tenants. Ensure your investment will have the fundamentals of a desirable property including access to schools, transport, freeways and amenities. These are hugely important in terms of rentability but will also contribute to the saleability of the property.
As highlighted earlier, the numbers will impact the type of property you choose to build, but Chris points out that an increasingly popular investment strategy is buying a block of land with a future title date.
“Choosing to buy in a new estate can be a smart move as you can secure vacant land today but settle on it in the future. The advantage is that you have a clear timeline and in a lot of instances it gives you 12 months or more to continue to save for your new investment property,” says Chris.
“You do however need to be mindful that to be able to secure finance, the funder will only assess you at the time of the land titling. Therefore, you need to be confident that you will be able to secure finance in the future.”
You also need to ensure you can afford to finance the build when the land settles; otherwise, you’ll be left making repayments on a block of land with no income being generated.
“There is no point buying the land if you can’t afford to build on it,” says Chris. “Often, people get excited that a block of land is cheap and within or lower than their budget, but forget they need to consider building costs. They risk going backward financially if they can’t afford repayments on the land without a rental income.”
Another popular investment option is locking in a fixed land and build contract so if prices increase over the next 12 months, you’re locked in at today’s prices. This is a good idea when the property market is turbulent.