A common mistake that many investors make is thinking that a beautiful house will ensure the greatest investment growth. However, it may be worth your while choosing a property based on what it has to offer in terms of location and size.

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Ugly properties have potential

Whilst a property may be beautiful, if it is surrounded by unattractive properties this then translates to value depreciation. However, if you invest in a property that is ugly on the exterior but surrounded by aesthetically pleasing properties, your property has greater potential for value appreciation.

Moreover when it comes to investment properties, renters are generally more focused on location than they are the exterior look of a property, therefore you should base your investment purchase on where the property is as opposed to how it looks.

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Don’t be afraid to renovate

Uglier properties are often sold at bargain prices and therefore offer you the opportunity to gain the most in return. An investment property is ultimately about the investor benefitting from the property financially. You can benefit by renting or by flipping. That’s when you buy, renovate and then sell for a higher value. Due to this factor, looking for a property that is structurally good, can offer an investor a great opportunity to make significant financial gain.

The idea of renovating can scare many investors away from buying cheaper houses. However, if you choose to buy a house that is outdated but structurally good, you have the opportunity to transform your ugly duckling into a beautiful swan. Simple cosmetic renovations, from repainting the exterior to retiling the kitchen and bathrooms, can lift the value of your property and result in significant profits when you resell, which translates to your investment being successful.

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Work with the rental market

Currently, Australian housing prices are at an all time high which is making it increasingly difficult for people to purchase their own home. The result is that there is now a rental boom with more and more people forced to rent a property because they simply cannot afford to buy their own. This means that it is a good time to be an investment property owner.

The demand on the rental market means that tenants today are less concerned with the aesthetics of a property and more concerned about simply finding a property in a good location that has reasonable living conditions. So the fact that a property is ugly isn’t deterring renters if it has working utilities, and suits their transport and lifestyle needs.

Focus on your role as an investor to find a property that is in a prime location and has good living conditions. This does not mean that you should go out and purchase a run down, pest infested dwelling and then try and rent it out.

Tenants still expect a functioning property and so you are likely to end up spending more and not profiting as the investor if you buy a dump. Instead when you are buying don’t be afraid to purchase an ugly property that is structurally sound.

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Lendi is Australia's #1 online home loan platform, based in Sydney, New South Wales. Lendi brings together smart technology and home loan specialist advice to help Australians compare, apply and settle the right home loan for their needs. Borrowers can search from 2,000 loan products from more than 40 lenders on the Lendi platform to shortlist the best loan products for their circumstances.