Warning: Undefined array key "ssba_bar_buttons" in /var/www/wp-content/plugins/simple-share-buttons-adder/php/class-buttons.php on line 598
Warning: Undefined array key "ssba_bar_buttons" in /var/www/wp-content/plugins/simple-share-buttons-adder/php/class-buttons.php on line 598
Warning: Undefined array key "ssba_bar_buttons" in /var/www/wp-content/plugins/simple-share-buttons-adder/php/class-buttons.php on line 598
Warning: Undefined array key "ssba_bar_buttons" in /var/www/wp-content/plugins/simple-share-buttons-adder/php/class-buttons.php on line 598
Warning: Undefined array key "ssba_bar_buttons" in /var/www/wp-content/plugins/simple-share-buttons-adder/php/class-buttons.php on line 598
Be aware of your budget
Property investment is a long-term financial commitment and it is essential that you have an understanding of your cash flow before investing in property. Asking your bank for a pre-approval of your investment loan is a straightforward way to understand your cash flow and will advise you on how much you are able to borrow. Seeking pre-approval is a critical step in purchasing a property and should be undergone by everyone to ensure that you remain financially stable.
Don’t underestimate running costs
Property Investment demands more from you financially than just loan repayments. Make sure include payments for rates, insurance, and general repairs into your budget, additionally, ensure that your budget for any other major work that may arise.
Tip: Once purchasing an investment property it is in your best interest to make the necessary upgrades early in your ownership to prevent costly maintenance issues arising. E.g. Fixing old plumbing systems at the time of purchase is less costly than fixing a flooded house a year or two on.
Buy in a growth area & understand the logistics of your area
When purchasing any property it should be in your best interest to plan for the future and to understand the growth that is occurring in the area. Take note of the prices that houses in the area are selling for compared to their purchase price, research where the nearest public transport systems are, see if there are schools within or close to the area and finally decide if your desired property is in a growth area.
Tip: Properties that are close to bus/train stations, schools and universities are often more attractive to renters.
Be realistic about your investment goals
Ask yourself: What am I looking for? Are you looking for a property to invest in long-term or are you seeking fast capital growth? Make sure you assess the market and decide if it is a reasonable time to purchase. When the property industry is at a high it is much easier to purchase properties to renovate and sell at a quick profit however in times of low economic stability it can take years to achieve a similar profit.
Do the work yourself
The general upkeep and renovations of investment properties are often very simple, however paying tradesman or gardeners to do the work can become very costly. If you are willing to get your hands dirty then doing the work yourself can be a simple way to save money and increase your profit margin.
Look for livable not luxury – Buy with your head, not your heart
An investment property only needs to be liveable and clean. Although it is your money remember that an investment property isn’t for you. Make sure you aim to purchase a property that is livable and appealing to a range of renters, including families, students or sharing tenants. Additionally, choosing an investment property must be done with your head and not your heart, a property on a hill may have a stunning view, but will it be easy to renovate on or will the building costs be increased?
Tip: Keep in mind that amenities that may excite you, such as pools, can be unappealing to tenants if they do not come with a pool cleaner.
Think carefully before negative gearing
Often the repayments on properties can be greater than the rental return you receive, this is means that your property is negatively geared. While it is known that negative gearing can have tax advantages, it can also be quite stressful. Negative gearing can lead to unnecessary financial strain if you do not have the finances to cover, rates, body corporate fees or loan repayments.
Tip: Ensure you correctly budget and take negative gearing into account
Make sure you are in a comfortable level of debt
Debt is a very common part of life but is essential that you remain in a comfortable level of debt. When considering purchasing an investment property consider your current level of debt and whether or not you are happy to increase it. Is your own home paid off? Are your cars paid off? Do you have any credit card debt? It is important to consider your options and be comfortable with your decisions.
Get a building inspection
Before signing any contract and going unconditional on your investment property it is imperative that you take the time to read through all of the building reports you receive. Confirm that the property is termites free, ensure that there is a pool safety certificate if necessary and make yourself aware of any other potential problems.
Find a good property manager and let them do their job
A property manager handles anything and everything to do with tenants, from finding you the perfect one to getting you the best price for your investment property, an excellent agent will be able to pinpoint the right price and monitor the market to tell you when to increase and decrease the rent. The role of a property manager, in essence, is to handle your property so that you don’t have to.
Tip: When it comes time to do your tax returns you can often claim to cost of your managing agent.
