What Makes a Great Investment Property?
What Makes a Great Investment Property?
Key Features Property Investors Should Consider Before Buying
Buying an investment property is very different from choosing a home for yourself.
A property you would personally love to live in isn’t necessarily the property that will deliver the best rental outcome. Successful investors tend to focus on factors such as location, renter demand, property type, ongoing costs, vacancy risk and the property’s appeal to the local rental market.
These investment property tips can help you understand what to look for when assessing a potential purchase and why speaking with a local property manager before buying can provide valuable rental-market insight.
At Verdi Property Management, we work with investment properties throughout Geelong and see firsthand which features renters value, which properties attract strong enquiry and what can make a property more difficult to lease.
1. Start With Location
Location remains one of the most important considerations when purchasing an investment property.
A good rental location will generally provide convenient access to the things renters need in their everyday lives.
Depending on the target renter, this may include:
- Employment areas
- Shopping centres
- Schools and childcare
- Public transport
- Universities
- Medical facilities
- Parks and recreation
- Major roads
- Cafés and restaurants
However, don’t assess a suburb based solely on its reputation.
Two properties only a few streets apart can have different levels of renter appeal because of traffic, accessibility, surrounding development or proximity to amenities.
2. Understand Local Renter Demand
One of our most important investment property tips is to consider the rental market before purchasing—not after.
Ask:
Who is likely to rent this property?
A four-bedroom home in Armstrong Creek may appeal to a very different renter demographic than a two-bedroom townhouse closer to central Geelong.
Understanding your likely renter helps determine whether the property’s:
- Size
- Floorplan
- Location
- Parking
- Outdoor space
- Heating and cooling
- Storage
are suited to local demand.
A property manager who regularly leases properties in the area can provide useful insight before you commit to the purchase.
3. Choose a Practical Floorplan
Rental properties don’t necessarily need extravagant features.
They need to be functional.
A practical floorplan can make a significant difference to renter appeal.
Features we generally like to see include:
- Well-proportioned bedrooms
- Built-in wardrobes
- Functional kitchen
- Adequate storage
- Good natural light
- Appropriate living space
- Convenient bathroom layout
- Secure parking
- Functional outdoor areas
For family homes, having multiple living areas or a separate study can also increase appeal.
Sometimes the simpler property is the better rental property because it suits a broader range of renters.
4. Consider the Property’s Rental Return
Before purchasing, understand how much rent the property could realistically achieve.
Don’t rely solely on the selling agent’s estimate.
A professional rental appraisal should consider:
- Comparable properties currently available
- Recently leased properties
- Property condition
- Location
- Bedroom and bathroom configuration
- Parking
- Heating and cooling
- Current renter demand
- Competing rental stock
You can then compare the expected rental income with the property’s purchase price and ongoing costs.
Importantly, rental yield shouldn’t be considered in isolation. A higher-yielding property may also have higher maintenance, vacancy or operating costs.
5. Think About Vacancy Risk
Weekly rent isn’t the only number that matters.
Consider two properties:
Property A: $600 per week with consistent renter demand.
Property B: $630 per week but is more difficult to lease and experiences several additional weeks of vacancy.
The property with the higher advertised rent doesn’t necessarily produce the better annual result.
When assessing an investment, consider both:
Rental return + likely vacancy.
A property that appeals to a broad renter market can provide greater flexibility when it’s time to re-let.
6. Look for Low-Maintenance Properties
Every investment property requires maintenance.
However, some properties are considerably more expensive to maintain than others.
Before purchasing, look carefully at:
- Roof condition
- Plumbing
- Electrical systems
- Heating and cooling
- Hot water system
- Appliances
- Flooring
- External timber
- Fencing
- Landscaping
- Gutters and drainage
Large gardens, extensive timber decking, older appliances and ageing heating systems can all increase ongoing maintenance requirements.
A building inspection can be particularly valuable before purchasing an established property.
7. Don’t Ignore Heating and Cooling
Heating and cooling can have a significant impact on renter appeal.
Geelong experiences both cold winters and hot summer periods, so comfortable temperature control is valuable.
Depending on the property, renters may value:
- Split-system heating and cooling
- Ducted heating
- Evaporative cooling
- Energy-efficient systems
- Ceiling fans
Rental providers also need to consider applicable Victorian minimum standards when assessing heating and other property features.
8. Parking Can Make a Difference
Off-street parking is particularly valuable in areas where street parking is limited.
Depending on the property type and location, this could include:
- Garage
- Carport
- Secure parking space
- Driveway parking
For larger family homes, a double garage may increase renter appeal.
For inner areas, even one secure off-street space can be an important feature.
9. Consider Storage
Storage is easy to overlook when purchasing an investment property.
Renters notice it.
Useful storage might include:
- Built-in wardrobes
- Walk-in robes
- Linen cupboards
- Kitchen pantry
- Garage storage
- Garden shed
A property with good storage is generally easier to live in, which can improve its appeal to long-term renters.
10. Outdoor Areas Should Be Usable and Manageable
A large backyard isn’t automatically better.
Many renters value outdoor space, particularly families and renters with pets, but the area should ideally be practical and relatively easy to maintain.
Features such as:
- Secure fencing
- Low-maintenance landscaping
- Covered entertaining areas
- Functional lawn space
- Appropriate drainage
can add genuine rental appeal.
Overly complicated gardens may instead create additional maintenance requirements.
11. Energy Efficiency Is Becoming More Important
Energy costs are an increasing consideration for renters.
Features that can improve a property’s appeal include:
- Solar panels
- Efficient heating and cooling
- Appropriate insulation
- LED lighting
- Energy-efficient appliances
- Good window coverings
Investors should also remain aware of evolving Victorian rental standards when assessing existing properties or planning upgrades.
12. Check Victorian Rental Minimum Standards Before Buying
This is particularly important when purchasing an established property.
Victorian rental properties must comply with prescribed minimum standards.
If you’re purchasing a property that has previously been owner-occupied, don’t automatically assume it is ready to be rented immediately.
Compliance issues may need to be addressed before the property is offered for rent.
This can potentially include matters relating to:
- Locks and security
- Heating
- Electrical safety
- Window coverings
- Kitchen facilities
- Bathroom facilities
- Ventilation
- Mould and dampness
- Structural condition
Understanding these requirements before settlement can help you budget for any necessary work.
13. Avoid Overcapitalising for the Rental Market
A beautiful renovation doesn’t always produce an equivalent increase in rent.
Before spending heavily on upgrades, ask whether renters in that particular market are likely to pay significantly more for them.
For an investment property, improvements should ideally balance:
Presentation + durability + renter appeal + cost.
Hard-wearing flooring, neutral finishes and reliable appliances can sometimes provide better value than expensive luxury finishes.
14. Consider the Property’s Future Competition
Don’t just look at today’s rental market.
Look at what is happening around the property.
Large amounts of new housing or apartment construction can potentially increase future rental competition.
On the other hand, new infrastructure, employment, schools, shopping facilities and transport connections can make an area increasingly attractive to renters.
Understanding the surrounding area helps provide context for the property’s future rental prospects.
15. Think About the Target Renter Before You Buy
Different properties attract different renters.
For example:
Family homes may benefit from:
- Multiple bedrooms
- Secure backyard
- Garage
- Nearby schools
- Storage
Townhouses and units may benefit from:
- Low maintenance
- Good transport
- Secure parking
- Proximity to shops and employment
Properties aimed at professionals may benefit from:
- Home office
- Modern kitchen
- Heating and cooling
- Convenient location
- Low-maintenance outdoor areas
There isn’t one perfect investment property.
The important question is whether the property suits the renter demographic you’re targeting.
New vs Established Investment Property
Both can work well.
A newer property may offer:
- Lower immediate maintenance
- Modern design
- Energy efficiency
- Strong presentation
- Contemporary appliances
An established property may offer:
- More established location
- Larger land
- Existing infrastructure
- Opportunity to improve the property
- Established rental-market evidence
Rather than choosing based solely on age, consider the individual property’s location, condition, price, rental demand and ongoing ownership costs.
House, Townhouse or Unit?
Again, there is no universal answer.
House
Can offer broader family appeal, outdoor space and land, but may involve more maintenance.
Townhouse
Can provide a balance between space and lower maintenance and may appeal to couples, professionals and smaller families.
Unit or Apartment
May provide a lower purchase price and reduced external maintenance, but investors should carefully consider owners corporation fees, building quality, parking and competing supply.
The best choice depends on your budget, investment strategy and local rental market.
Don’t Buy Based on Rental Yield Alone
Rental yield is useful, but it shouldn’t be the only consideration.
A property offering an attractive headline yield may also have:
- Higher maintenance
- Greater vacancy risk
- Limited renter demand
- Higher owners corporation fees
- Significant compliance work
- Less desirable location
Consider the investment as a whole rather than relying on one percentage.
Speak to a Property Manager Before You Buy
One of the simplest investment property tips is also one of the most overlooked:
Speak to a local property manager before signing the contract.
A property manager can provide a rental-market perspective that differs from the selling agent’s role.
At Verdi Property Management, we can help prospective investors understand:
- Likely market rent
- Local renter demand
- Property features renters value
- Potential leasing challenges
- Comparable rental properties
- Property presentation
- Potential compliance considerations
That information can be particularly valuable while you’re comparing several potential investment properties.
Frequently Asked Questions
What Makes a Property a Good Investment Property?
From a rental-management perspective, a good investment property generally combines a desirable location, strong renter demand, practical layout, realistic rental return, manageable maintenance and broad renter appeal.
Financial performance and potential capital growth involve additional considerations that should be discussed with appropriately qualified advisers.
Should I Buy a New or Established Investment Property?
Both can be suitable. Newer properties may require less immediate maintenance, while established properties can offer stronger locations or opportunities to add value. Assess each property individually.
How Do I Know What an Investment Property Will Rent For?
A professional rental appraisal can compare the property with competing listings and recently leased properties while considering its condition, features and location.
Should I Get a Rental Appraisal Before Buying?
Yes. Obtaining an independent rental appraisal before purchasing can give you a clearer understanding of the property’s likely rental income and renter demand.
What Features Do Renters Look For?
This varies by market, but practical layouts, heating and cooling, storage, secure parking, low-maintenance outdoor areas and convenient locations commonly contribute to renter appeal.
Buying an Investment Property in Geelong?
A great investment property isn’t necessarily the biggest, newest or most expensive property.
From a property management perspective, some of the strongest rental properties are simply well located, practical, easy to maintain and suited to the renters looking in that particular market.
At Verdi Property Management, we work with rental properties throughout Geelong and can provide local rental-market insight before you purchase.
If you’re considering an investment property in Geelong, contact us before you buy. We can provide a complimentary rental appraisal and discuss the property’s likely renter demand, rental range and management considerations.
Getting professional rental advice before purchasing could help you make a more informed decision from the beginning.
Disclaimer
The information contained in this article is provided for general educational purposes only and does not constitute financial, investment, taxation or legal advice. Verdi Property Management provides property management and rental-market information and does not provide licensed financial or investment advice.
Property values, rental returns and market conditions can change, and past performance is not a guarantee of future results. Before purchasing an investment property, you should obtain independent financial, taxation, legal, building and other professional advice appropriate to your circumstances.
