Home ownership is the great Australian dream. But our love of buying property does not end there. When we have spare cash to invest, or have paid off the mortgage and want to put our equity to work, many of us turn again to property putting our trust in bricks and mortar and buying for investment.

While the term ‘property investor’ conjures visions of an individual with a broad property portfolio, it actually applies to many of us. According to the Real Estate Institute of Australia, the latest taxation statistics show 14.9 per cent of taxpayers are investors in the residential property market – that’s 1.9 million people.

The majority of those are ordinary “mums and dads” with only one investment property. In the latest available statistics, 2010-11, 73 per cent of investors had only one such property.

For most of us the attractions offered by negative gearing – the ability to claim a tax deduction for expenses such as mortgage interest and maintenance costs associated with an investment property – are an incentive to invest in property.

If the cost of owning the property is greater than the rental income, that loss can be offset against other taxable income, including salaries. It is important to retain all receipts for expenses associated with the investment property, these can be provided to your accountant or bookkeeper who will advise on which are deductible.

There are reports of investors buying property for their funds sight unseen, but the same principles apply when buying an investment property as when buying your own home.

After deciding on preferred locations and whether to buy a house or apartment, start by checking out median prices in those areas. Although the location and the quality of home has a big bearing on its price, this will give an indication of prices in those areas.

Attending open homes and the auctions of similar properties in the area will give an indication of what they are going for and what your money can buy. Let the agent present at the inspection know what you are looking for – sometimes agents can put you on to a suitable property before the marketing campaign even begins.

Consult your bank, draw up your budget and be clear about your maximum price. There are many great properties out there, do not be tempted to exceed your maximum if you find “the right” one. Make a list of features you must have and those on which you would compromise.  Remember: this is a rental; those criteria may be very different from those for your home.

For example, you may be willing to spend time on a high maintenance, hard-to-clean home, but a rental property should be hard wearing and easy to maintain. More importantly, any purchase should be underpinned by thorough research – including viewing the property, preferably several times.

Before buying it is a good idea to consult property managers in the area in which you are planning to buy. They are the experts on the types of properties most in demand, the rentals they can command and the types of tenants attracted to the area. Take their advice about the type of property you should consider buying, to attract the biggest potential pool of tenants.

Think about what would make your property attractive to tenants. For example, you may enjoy driving to work, but with a rental property, proximity to public transport is generally essential. If buying a family home to rent out, is it near schools? If buying a trendy apartment, tenants will want cafes nearby.

If you are unsure, consider hiring a buyer’s agent. They work for you, not the seller, and have extensive experience in buying properties for investment. They will do the research, prepare a short list, even negotiate the sale or bidding at auction if that is what you want.

Most importantly, put aside emotion. When buying your home you are looking for “the one”. But you don’t have to love your investment property – it is doing a job for you and must be chosen for its suitability to do the job well.

Originally published on realestateview.com.au.