8 tips for buying an investment property
Australians love to invest in property. Investing in property is all about increasing your wealth and securing your financial future. But not all investment properties deliver positive results, so it is vitally important that you know how to effectively manage your investment for the best return.
The cost of owning an investment property can be surprisingly low after you take into account rental income and tax deductions you may be able to claim. Here are some things you must consider to make it a successful experience with great returns.
1. Make sure you choose the right property at the right price
Investing in property is about capital growth, so choose a property that is more likely to increase in value and buy at the right price. Research, research, research and be patient. You will soon learn how to spot a bargain when you see one.
2. Do your sums
Property should be viewed as a medium to long term investment so it is important that you ensure you can afford the mortgage and maintenance for the property over a long period of time.
Consider all the ongoing costs such as insurances and interest on your mortgage.
3. Find a good property manager and let them do their job
Our property managers are professionals in their field, and it is their job to make sure things are kept in order for you, the property is well tenanted and the rent is paid.
They can assist with ongoing advice about tenants, property law and your rights, and take care of any maintenance issues and repairs under approved incurred costs arrangements.
A property manager will cost you a small percentage of the rent paid, and the fee is another tax deduction against your investment
4. Understand the market
Speak to as many locals as you can, especially if you are investing in a region where you have never lived. Many people who live in capital cities are investing in smaller regional cities because the returns are far greater and the properties available on the market provide far better investment options.
5. Get your mortgage right
Find a great mortgage broker and let them determine the best options available to you. Getting sound advice can make an enormous difference to your financial well being down the track.
Structuring your loans correctly is crucial to ensure you get the most from your investment.
6. Use equity from another property if you can
If you have the option, using equity from your home or another investment property can be a great way to buy an investment property.
Equity can be calculated by working out the difference between the value of your property and what you currently owe on the mortgage.
7. Make the property attractive to potential tenants
Style your investment property with neutral tones and simple fittings. Give it a fresh coat of paint and make sure it is spotless before tenants move in. Ensuring the kitchen and bathroom are well presented will go a long way in attracting quality tenants.
Try to keep the garden low maintenance and easy to care for so that tenants don’t find it a burden and neglect it over time.
8. Take a long term view
Property is a long term consideration for an investment. You cannot rely on market prices rising quickly, so ensure you make sound, long term decisions before jumping into the property investment market.
For more information about investment opportunities in the Ballarat market, we are always happy to have a chat.
Give us a call on 5331 2000