The appeal of an investment property to potential tenants should be at the forefront of an investors mind, as it is the tenant who will pay the rent and, ideally, take good care of the property.
But possibly, more important is the appeal to future buyers, even if the investor has a buy-and-hold strategy. This is because demand from owner-occupiers, rather than investors or renters, is the key driver of capital growth in the long-term.
Two-thirds of Australians live in a home they own, while the remainder rent, according to Australian Bureau of Statistics (ABS) data. Owner- occupier appeal is one of the core aspects to look for in an investment property and heres why:
Residential real estate is not dominated by investors, it’s dominated by people who have a basic survival need. Seventy per cent of the market buy property for a roof over their head and 30 per cent buy it as an investment.
Properties that suits families and couples who are on higher incomes could increase the possibility of long-term capital growth and market share of buyers.
A good strategy comes down to understanding that property is about people. Who really wants to live in your property – not rent it but buy it.
Owner-occupiers are more emotional in their property decisions than investors, who are primarily motivated by financial return.
Know your future buyer
Many investors base purchasing decisions on rental yield, as properties with high rental returns are more likely to be positively geared.