10 Things to Know Before Buying Investment Property


Property investment can be an exciting way to build your assets, grow wealth and increase cash flow.

Especially in the current market where our property markets have gone from strength to strength over the past couple of years.

But while many investors start out with the best intentions, only a few will ever make it to the top of the property investment ladder.


Some make some wrong decisions, others take bad turns.

To help avoid that happening, here is a list of the top 10 most important questions any investor should ask before buying their first, or even their 10th investment property.

1. Does this property fit into my long-term strategy?

Planning is bringing your future into the present so that you can do something about it now.

So do you have a plan in place? Because if not, you’re not ready to buy your next investment property.

You see, creating an investment strategy is the first essential step when you set out on your property investment journey.

You need to document a proven property investment strategy that aligns with your risk profile, goals and time frame.

At Metropole, we help our clients develop substantial retirement income, in other words, cash flow for their future years.

Our plan is not to beat the short-term averages, but to build a substantial asset base in the long term, which means we steer clear of “get-rich-quick schemes.”

In my experience winning strategies lend themselves more to the tortoise pace of slow and steady.

By way of example, 2 long term strategies you could consider for your next investment property are simply “buy and hold” or BRRR – buy, renovate, rent, refinance and repeat.

Buy and hold involves leveraging the complementary mechanics of equity and time which means you buy an asset and hold onto it long term to allow your capital gains to give you extra equity for the next purchase.

Once you’ve built a substantial asset base you can then transition into the cash flow stage of your investment journey.

Our BRRR strategy is similar but one where you have the opportunity to “manufacture” capital growth through renovations and speed up the growth of your portfolio.

For example, buying a ‘fixer-upper’ in a desirable location and then renovating with a view to increasing your property investment’s capital and rental value.

Of course, your strategic property plan will involve much more than that. Some of the many parts include:

  • An asset accumulation strategy
  • A manufacturing capital growth strategy
  • A rental growth strategy
  • An asset protection and takes minimisation strategy
  • A finance strategy including long-term debt reduction
  • A living off your portfolio strategy

It’s vital then that once you choose your strategy, you only look at investment properties which fit into your long-term strategy rather than getting distracted by the many perceived opportunities in the market.

Having a written Strategic Property Plan means that you won’t worry too much about market timing.

Rather you will concentrate on buying the best asset you can afford and staying in the market for the long term.

Because if you have a long term plan and if you believe that property will continue to increase in value in the long term, as it has done historically, then why would it matter what the price of your property is going to do in the next six weeks or even in the next six months.

2. Is this an investment grade property?

The once in a generation property boom we experienced during the Covid pandemic and which was fuelled by historically low interest rates at a time of strong pent up demand was a time which encouraged many investors to consider buying their first or their next property.

But the market is different today you can’t just run out and buy any property.

Because not all properties make good investments!

In fact, in my mind, less than 4% of the properties on the market currently are what I call “investment grade.”

You see…currently there are fewer properties on the market than there have been for a long time, and while there are still many properties on offer, there is now a real shortage of quality “investment grade” properties.

Of course, any property can become an investment property.

Just move the owner out, put in a tenant and it’s an investment, but that doesn’t make it “investment grade”.


An investment-grade property is one that offers strong and stable rates of capital appreciation, a steady cash flow, liquidity, easy management, a hedge against inflation and good tax benefits.

Having said that, I believe investors should invest for capital growth first.

It’s easier to build a substantial asset base that way and then you can eventually buy your cash flow down the road.

Think about the location

So before buying your next investment property, you need to ask yourself, would this property be considered investment grade?

For example, will the location outperform in the long term because of its demographics?

When considering the demographics of a location it’s not just about owner-occupiers but also the demographic of the tenants who are likely to rent your property.

You don’t really want a tenant who’s only a week or two away from broke do you?

I look at locations where the tenants that are aspirational, have good income and are likely to have increasing income over time so they can pay more rent in the long term.

Think about the neighbourhood

Is the property located in a 20-minute neighbourhood – in close proximity to shopping, amenities work?

Generally, a good neighbourhood is determined by the physical location, suburb character and its close proximity to amenities such as a shopping strip, park, coffee shops, education, and even some jobs.

It’s obvious then that in our new ‘Covid’ world, people will want to be in a location where everything they need is in short 20-minute proximity – whether that is on public transport, bike ride or walks – to their home.

Think about the property

Once you’ve done the above, the next step is to think about the property itself.


Will this particular property outperform the averages in the long term?

Will it appeal to a wide range of owner-occupiers and tenants?

Because remember, you’re not looking for short-term profits, you want to outperform the long term averages.

You need to work out the land-to-asset ratio (the higher the better) and decide whether there is something special or unique about this property.

Is there potential to add value to this property – manufacture capital growth through renovations or development rather than just waiting for the market to do the heavy lifting?

Finally, in order to determine whether the property is investment grade you need to be confident you’ve done all your due diligence on the location and the property.

Are there any risks?

3. What is the property worth?

For products that are plentiful, transacted often, and largely the same as each other, determining market value is really easy.

But purchasing a home is typically not like buying tomatoes at the grocer.

Each property tends to have features that make it unique.

Even two houses, side by side in the same street could be valued differently because of their individual attributes.

To make things even trickier, the property is typically not transacted frequently, so it may be hard to find a recent sale of a home similar to the one you’re interested in buying.

There is no “right” price 

Property is unlike most other things that you buy – there are no set prices.

Buyers and sellers must negotiate a price that is acceptable to both of them.


While the asking price is a guide of what the vendor would like to achieve or what the selling agent would like to get, for you the asking price is only a rough indication.

To determine how much a property is worth you need to check all the very recent comparable sales, the property’s intrinsic value and then also determined the following 3 figures:

  1. What price do I want to pay for the property?
  2. What do I consider the market value to be?
  3. What price am I prepared to pay and when am I prepared to walk away?

By the way… don’t even consider buying cheap properties.


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