It should be clean, have good-sized bedrooms, ideally with off-street parking, and good positioning away from noise and main roads.
“You’ve got to buy something that suits the majority of tenants in that particular area,” Gray says. “Features such as these will ensure your property is attractive to renters and will guarantee your income stream.”
Sounds like a no-brainer, but it can be easy to mistake a lemon investment for a good value prospect.
"If the property is close to a major CBD, beaches, schools, public transport and leisure facilities, it’s more likely to grow by more than the average in a good market and is more likely to hold its value in a down market," Gray explains.
Keep in mind that if you buy around the median price, then more people can afford to rent it and more people can afford to buy it, if you were put into a forced sale position.
“Cheap properties are cheap because they’re not in great demand and there’s plenty to choose from,” he says. “It’s often worth paying market value for a good property in a top suburb than it is to get a discount for something that no one else really wants.”
Do some quick renovations such as a paint job, re-carpeting, tidying the garden, painting the fence, installing new curtains or blinds and replacing the kitchen-cupboard doors. “For every dollar you spend on renovating you should be aiming to get at least $1-2 back in the value of your property,” Gray says.
When your property grows in value, refinance to create an emergency cash buffer zone. “You don’t want to find yourself in a forced-sale position, as you won’t get the best price and it may trigger capital gains taxes and other expenses,” he warns. A cash buffer will ensure you can continue to make mortgage repayments even if you lose your job.
It’s so important that you hire a professional property manager to ensure you get reliable tenants and that they pay a good market rent. “Aim to tie your tenant down to 12 month agreements, to help guarantee your rental income,” Gray advises.