Top 10 Things Every Investor Should Look for in a Property in 2025

Investing in property is a big decision, offering the potential for long-term wealth generation and financial security. However, not all properties are created equal when it comes to investment potential. Here are the key factors to consider when evaluating an investment property.

1. Location, Location, Location

The old adage still rings true: location is paramount. The property’s location will heavily influence its rental appeal and long-term value. Look for areas with strong demand for rentals, such as those near:

  • Public transport: Proximity to train stations, bus stops, or light rail can boost a property’s desirability.
  • Schools: Properties within sought-after school catchment areas are particularly appealing to families.
  • Employment hubs: Locations near business districts or industrial areas attract tenants who want to live close to work.
  • Lifestyle amenities: Consider properties near parks, shopping centres, cafes, restaurants, and beaches.

Research the suburb’s growth potential, historical property values, and any planned infrastructure projects that may increase demand in the area.

2. Rental Yield and Capital Growth

A successful investment property strikes a balance between strong rental yield and potential for capital growth.

  • Rental yield is the annual rental income relative to the property’s market value. High rental yield can provide steady cash flow, especially for first-time investors.
  • Capital growth is the increase in property value over time. While rental income can cover expenses, capital growth is where long-term wealth is generated.

Research the suburb’s rental vacancy rates and average rents to ensure the property aligns with your financial goals.

3. Property Type and Layout

The type of property you choose—whether it’s a house, apartment, townhouse, or duplex—will impact tenant appeal and maintenance costs. Consider the following:

  • Target market: Understand the demographics of the area. Are you appealing to families, young professionals, or students?
  • Practical layout: Properties with versatile and functional layouts are more appealing to tenants. Features such as multiple bedrooms, built-in wardrobes, and open-plan living spaces tend to attract renters.
  • Low-maintenance properties: Look for properties with durable fittings, modern kitchens, and easy-to-maintain gardens to reduce ongoing maintenance costs.

4. Affordability and Financing

Ensure the property fits within your budget, not only for the purchase price but also for ongoing costs such as:

  • Loan repayments
  • Council rates
  • Strata fees (for apartments or townhouses)
  • Insurance
  • Property management fees

Speak with a mortgage broker to figure out your financing options and pre-approval status. It’s also wise to have a financial buffer to cover unexpected expenses.

5. Quality of the Neighbourhood

The quality of the neighbourhood plays a crucial role in tenant satisfaction and property value. Investigate factors such as:

  • Crime rates in the area
  • Cleanliness and upkeep of surrounding properties
  • Accessibility to public spaces and recreational areas
  • Community amenities, such as libraries and community centres

A well-maintained, safe neighbourhood will attract more tenants and ensure steady demand.

6. Development and Zoning Regulations

Check the local council’s development and zoning regulations to ensure there are no restrictions or surprises that could impact your investment. Also, assess the potential for future development nearby. Large developments, such as high-rise apartments, could increase competition for tenants, while upgrades to infrastructure may enhance the area’s appeal.

7. Condition of the Property

Before buying, always arrange for a thorough building and pest inspection. Structural issues, water damage, or pest infestations can be a big problem down the line. If you’re purchasing an older property, consider the potential cost of renovations or updates to meet tenant expectations.

8. Tax Benefits and Depreciation

Investment properties can offer tax advantages, including negative gearing and depreciation on the property’s structure and fittings. Speak with an accountant or financial advisor to understand the tax implications of your purchase and how to maximise benefits.

9. Future Market Trends

Property markets can fluctuate, so it’s important to keep an eye on current and future trends. Consider factors such as:

  • Trends in population expansion and the movement of people into the area
  • Interest rate changes and their impact on borrowing capacity
  • Shifts in tenant preferences, such as demand for sustainable or energy-efficient homes

Keeping informed about the broader market will help you make a well-timed purchase and adapt to changes in the property landscape.

10. Property Management

If you don’t plan to manage the property yourself, hire a reputable property manager to handle tenant applications, rent collection, and maintenance. An effective property manager can save you time and stress while ensuring your investment runs smoothly.

Final Thoughts

Investing in property requires thorough research, and a clear understanding of your financial goals. By looking at factors such as location, rental yield, property type, and market trends, you can make an informed decision and set yourself up for long-term success.

Remember, no investment is without risks, so take the time to consult with professionals and seek advice tailored to your circumstances.