Investment Finance

Use our Free
Property Investment Checklist to Find
High Performing Investment Properties

How to Use the Checklist

The Investors Edge Finance “Investment Property Checklist and Scoring System” has been designed to assist property investors pinpoint the right property for their portfolio.

The Checklist focuses on proven attributes that influence capital growth potential and tenant appeal to optimise rental income and growth. The Scoring System is weighted to help investors determine the property most suited to their financial position.

The Checklist is divided into 11 key criteria of concern. Each criterion has its own score to highlight the positive and negative attributes of a given property under consideration. The higher the score the higher the capital growth potential, the lower the score the lower the growth, lower scores should be accompanied by higher yields to compensate for lost growth; Scores below 50 may have heightened risk.

Print off the Checklist and take it with you and complete for each property inspection. When you get home enter the score into the columns on the right and compare each property against each other.

Scoring Guide lines:

90%+ Highest growth properties and most suitable for owner occupiers or investors with strong cashflow because rents may be as low at 3%.

75% - 89% High grade investment properties, excellent growth potential but cashflow may be tight as the price may be forced up by competition from owner occupiers, expect rent around 3.5%

60% - 75% Mid range investment grade properties will be most suitable to most property investors, strong capital growth potential expect rents around 4%.

50- 59% Low mid range investment grade properties which, lower capital growth potential but stronger yields, expect up to 6%, most suitable for investors with limited cashflow.

Less than 50% Low grade investment properties, be very wary of these properties as they may be difficult to on-sell if required, expect low growth and demand high yield, eg 10%+.

1. Location - Maximum score 13 points

   The highest growth comes from ‘intrinsic value’ which is only found within a short commutable distance from highly paid work. The greatest concentration of highly paid jobs is in the CBD’s and CDB fringes so the inner suburbs of capital cities create ideal conditions for long-term high capital growth.

   Inner suburbs create scarcity as available land is in short supply creating the higest demand which is the perfect recipe. This creates the highest demand and the lowest supply which is the perfect recipe for sustained high growth.

2. Neighbourhood fit - Maximum score 10 points

   To optimise appeal, hence property value and growth, the property must fit in with the neighbourhood. Tenants and potential buyers search for certain style/types of properties in a given area; most are attracted to an area by the style and type of properties for which the area is noted.

   The lesson, make sure the property you buy is a good fit for the neighbourhood and you will attract the highest interest/competition when the bank sends the valuer around for your next loan or you sell.

3. Location & facilities - Maximum score 10 points

   People will pay a premium for easy access to work and facilities/amenities particularly if it is in a quiet location, especially highly paid workers who typically spend the longest hours at work. .

   So, choose a property that is located on a quiet tree line street that is close to trams, trains and cafes; you, the tenants and buyers will be lining to up to fight for your property.

4. Building Era - Maximum score 10 points

   Older buildings have charm, character and huge appeal, there is no scarcity for new buildings, you just build it, but only a select few can buy a magnificent Edwardian, Victorian or Art deco, the older the building the greater the scarcity and demand.

   Even properties built as recently as 25 years ago are starting to generate their own appeal because they are now blending into their neighbourhood creating a sense of belonging.

5. Building Type - Maximum score 10 points

   The most prized buildings are the lowest density buildings, so houses score the highest, small blocks of flats also score well but high rise buildings score poorly because of the high density living they create.

6. Title & Zoning - Maximum score 1 point

   Get the wrong title or zoning and the banks will lend much less and sometimes at higher interest rates which results in fewer buyers and slow the capital growth potential.

7. Carparking - Maximum score 7 points

   Convenience is being able to park your car in a garage, carport or at least a car space on title. Properties without an on-title car-park dampened price growth and tenant interest

8. Outdoor Area - Maximum score 10 points

   People love to be able to walk outside for a breath of fresh air or a BBQ. Private balconies, particularly those with a pleasant aspect/view and courtyards, even more so those with an easterly aspect add huge appeal to any property, hence score very well.

9. Plan and Living - Maximum score 13 points

   People love an open, spacious feel in their homes; add a practical floor plan that flows nicely and you have a recipe for high occupancy and strong, ongoing market appeal.

   Of particular interest is the kitchen and bathroom, nice modern facilities score well but those that can benefit from a low cost, high impact make over score even better.

10. Property condition - Maximum score 8 points

    Of course people want to live in properties in the best possible condition, so if your property is in good condition it will score well, however if you are buying a property to renovate be very careful you are buying it cheaply enough to be able to profit from your improvements.

    Properties in poor condition need to be checked by a professional, particularly for structural problems. Be careful where cosmetic repairs are required as no buyer/tenant appeal is added with a renovation.

11. Affordability - Maximum score 7 points

    Finally, but most importantly, you must do your numbers; you must be able to afford the property you are considering. There is no point buying a high growth properly only be forced to sell it because you can’t afford the repayments.

    Remember, the highest growth properties, by definition, will be the lowest yielding properties.

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