There is a reason that property investment is one of the most popular wealth-building strategies in today’s market.  Bricks and mortar are a physical asset that can be easily understood and property can increase in value over time.  When investing in property, finding the right location and property type to suit your investment profile are the keys to your success.

How important is location?

A property located in a prime area such as Subiaco in Perth, Sydney’s Bronte or St Kilda in Melbourne can accrue capital gain fast, but location isn’t the only factor in strong capital growth.  If you need to borrow money using a principal and interest loan over 10 years with an interest rate of 18%, a smaller property slightly further from the shops will be a more profitable investment than a substantial beachfront residence.

Keep in mind that a top location isn’t the be all and end all – property in a prime location will only be a positive investment if it’s in good enough condition to attract rental income.

Choose the property type that fits your investment profile

Property investment allows you to make the decision about property style – will it be a house, an apartment or a townhouse?  The tenant profile you are looking for can influence a decision over whether to select a house, unit or flat.  While young families may be looking for a single-storey house in the suburbs, a professional couple might be more attracted to a townhouse or unit in the city centre.

Balance capital gains against other costs

While higher land prices mean that houses can experience better capital growth, there are extra costs to consider such as maintenance and taxes.

Rental income can also be lower relative to the value of a house rather than a unit or townhouse.  In the long run, total returns for units could be similar to the investment return on a house.

You know where you are with property

No matter what mix of location and property type, you know what you’re dealing with when you own property as an investment.  Selecting a well-managed, properly financed property in a well thought-out location will always be the best performer over the long term.