Many people nowadays are seriously considering putting their money to good use by investing rather than indiscriminately spending it.

One of the popular options is getting an investment property, which could not only broaden your investment portfolio but also provide a good source of passive income.

However, it is important to weigh your options such as recognising features that you may find different from those that you seek for your dream house or property. For instance, your goal for an investment property is to attract tenants and depending on their preferences, the more it appeals to your market the more it spurs interest.

Generally, when looking for your ideal investment property, it is important to consider one that is easy to maintain and retain value especially in generating capital gains instead of one that you consider living in.

Remember that an investment property is more of a business decision instead of an emotional one with the primary aim of addressing market preferences instead of yours.

Catering to the rental market

The first thing you have to consider when looking for investment property options is to investigate the needs and wants of your target market, regardless of whether your intentions are to better manage your taxes, build a property portfolio, or seek to earn a sustainable side income.

Doing your own market research will help you understand and weigh your risk and investment options, which will give you a better picture of how you could better calculate or mitigate risks.

For instance, you may not consider looking at suburban or urban locations because you prefer a more laid-back environment. However, from an investment standpoint, such locations tend to attract more renters.

Areas around universities or colleges often proved great suburban investment prospects due to a consistent demand for student accommodations. The closer the proximity of the property to the university, the more potential renters will be looking into it.

The same thing goes for areas located near business establishments, hospitals, industries, and commercial centres where the workforce population is more likely to consider.

Attracting the tenant market

After doing your property location research, your next goal is to evaluate which types of properties and features appeal most to your target market.

Different types of renters have different wants and needs. For instance, when you are targeting families, it is important that you offer features such as extra storage, garage space, enclosed backyard, off-street parking, or an alternate bathroom.

For professional individuals or couples, you might offer units with assigned offsite parking, proximity to public transport, and communal facilities.

Always aim for low maintenance

While incurring costs for regular maintenance and repairs can eat up a significant portion of your rental income, it is important to always consider this when you start to plan for your investment property.

Some properties, especially older structures, have more need for maintenance and repairs compared to newer ones.

For instance, when searching for prospective investment properties, it is vital to look into the age of the property, as well as items that may need attention such as a water heating or air-conditioning system which may take out a huge chunk off your budget to fix or replace.

Another consideration is to aim for low-maintenance jobs on backyard upkeep such as mowing and gardening.

If the property includes a bigger open space or a complex garden set-up, hiring professional service providers for the regular upkeep of the grounds could be more practical and ensures that nothing goes wrong that could end up costing you more to fix. This maintenance cost may be factored into your lease conditions so that proper expectations are made regarding rental costs to avoid confusion.

Rental yield and capital gains

Also known as rental yield, this is the regular figure referring to the cost of the property and the mortgage for it. On the other hand, capital gain refers to the potential the property has for increasing its value in the coming future.

If you get the chance to have the ideal location for your investment property, you just might be able to get both. However, at the start, it is more important to consider how much the investment property will cost and how much you may be able to earn based on the demand in the area.

It is important to strongly consider your personal financial situation to better get a good perspective on how such an investment could benefit you both in the short and long term.