Property investment is a relatively low risk option, but it can be stressful if you don’t know what to look out for. These are some warning signs that you should keep in mind if you are looking to buy property.
- High rental vacancies in the area: Rental vacancy rates can give you an indication of the desirability of the area. High vacancy rates but low demand is not a good sign, purchasing a property in such an area will restrict both potential renters and future buyers.
- High supply of comparable properties: An area might have many properties with similar characteristics which increases competition if you decide to rent or sell your property. Avoid purchasing a property with surrounding properties which are similar in size and value.
- Surrounding DAs and associated developments: There may be pending Development Applications (DAs) in the area and you should be aware of what they are and how they may impact the area. Undesirable developments might lead to a reduction in property value.
- Rejected DAs for subject property: Knowing what type of developments have been rejected will give an indication of which developments you may or may not be able to make to your property. This could limit how you’re able to utilise the property down the line.
- Restrictions on the use of land: Even if you have one intended use of the property, restrictions on the use of land could narrow prospective buyers in the future.
- Settlement date: An early or rushed settlement date could mean you don’t have a lot of time to organise a financing or paperwork. Discuss with your vendor why the settlement date is early, it may be because they have committed to another property.
- Multiple houses for sale in the street or area: A sudden increase in the number of properties on sale in an area could be indicative of unpleasant developments or changes. Look further into what could have caused an increase before purchase.
- Renovation needed/structural problems: You might decide to buy a property that isn’t in the best condition but can be renovated. However, you should try to get a good estimation of the costs of renovations or even small improvements that need to be made.