How to Spot a good Investment Property in Australia

Not every property that looks good on a listing will perform well in the real world.Some will drain your cash flow, sit empty between tenants, or stagnate in value for years.

A high-performing investment property isn’t about guesswork - it’s about ticking the right boxes, using data, and making sure it fits your strategy.

Here’s how to tell if a property has the potential to grow your wealth rather than become a headache.

1. How to spot a good investment property australia? Strong Rental Demand

Why it matters: Even the best capital growth means little if your property sits vacant.

• Vacancy rate check: Look for suburbs with a vacancy rate under 2% (SQM Research or CoreLogic data).

• Rental listings: If you see very few rentals available in the area, it’s a sign tenants are competing for properties.

• Rental price trend: Rising weekly rents often indicate demand is outpacing supply.

Example: In 2025, parts of Perth’s outer suburbs have vacancy rates under 1%, meaning new rentals are often filled within days.

2. Healthy Rental Yield

Why it matters: Yield determines how well your investment covers its own costs.

• Gross yield formula:(Annual Rent ÷ Purchase Price) × 100

• Houses in many Australian markets: 4–6% gross yield is solid.

• Units/townhouses: Often higher yields (5–7%) but consider strata fees.

Pro Tip: High yield doesn’t always mean high growth — balance yield with capital growth potential for long-term returns.

3. Location Growth Drivers

Why it matters: Growth follows jobs, infrastructure, and lifestyle appeal.

• Infrastructure: New transport hubs, hospitals, or major retail centres.

• Employment: Areas with diverse job markets are more resilient.

• Lifestyle: Cafes, parks, beaches, cultural attractions keep demand steady.

Example: Suburbs on new metro lines in Sydney’s west are already seeing early price pressure before stations are complete.

4. Supply Constraints

Why it matters: When supply is limited, prices rise faster during demand spikes.

• Look for suburbs with zoning restrictions, heritage protections, or limited vacant land.

• Avoid areas with large tracts of developable land unless demand growth is expected to match.

Example: Coastal suburbs with environmental zoning often see strong long-term growth because there’s simply no space to add new dwellings.

5. Comparable Sales Support the Price

Why it matters: Overpaying eats into your returns and delays capital growth.

• Compare at least 3–5 recent sales for similar properties in the area.

• Adjust for land size, renovations, and property condition.

• Use this data to set your maximum offer price.

6. Property Condition & Tenant Appeal

Why it matters: Properties with broad tenant appeal rent faster and hold value better.

• Good natural light, functional floor plan, and low-maintenance features.

• Close to schools, public transport, and shops.

• No major immediate repairs needed — unless your strategy is to renovate for equity.

Pro Tip: Avoid properties with quirky layouts or limited parking unless you’re targeting a very specific tenant demographic.

7. Alignment With Your Strategy

Why it matters: A property that’s “good” for one investor might be terrible for another.

• If you’re cash flow-focused, prioritise yield and low maintenance.

• If you’re growth-focused, accept lower yield in exchange for a location with strong future demand.

• If you’re balanced, aim for a property that sits in the sweet spot of both.

Quick Checklist Before You Buy

✅ Vacancy rate under 2%

✅ Gross yield within your target range

✅ Strong growth drivers in place

✅ Limited risk of oversupply

✅ Price supported by comparable sales

✅ Broad tenant appeal

✅ Fits your personal investment strategy

Spotting a high-performing investment property comes down to three things:

1. Knowing your strategy - so you buy with purpose.

2. Using the data - so you avoid emotional decisions.

3. Thinking long term - so you build wealth sustainably.

If you consistently buy properties that tick these boxes, you’ll build a portfolio that works for you, not against you. How to spot a good investment property Australia!

Reach out if you'd like a free consultation.