Property investment can be a scary prospect - especially for those with little knowledge on how to do it, and do it right. And of course if it was easy, wouldn’t we all be two or three houses deep?
But even though it isn’t always a simple road to property investment, it can be done, and a good place to start is with these beginner tips below.
What you buy matters
Unfortunately, not any old property will do. You can’t just buy a house, pop in the first tenants you meet, and sit back with your feet up - there is a bit more too it than that.
If you’re looking for some good financial gains (which, let’s face it, isn’t that why people invest?) then you’ll need to do your homework in order to make money, which you can do in four different ways - through capital growth, cash flow, tax benefits and accelerated growth. Not sure what any of these mean? That’s where you need to start your research.
Read more: Tips on using property investment for retirement planning
Know and understand property trends
The property market moves in cycles - and it is important to understand where the cycle is currently sitting so you don’t buy when the market is at its peak… only to have the value of your property remain stagnant in a down-turn.
Of course this may only be applicable if you want to do a quick flip, because if you’re in it for the long haul, then you may reap what you sow in 10 or 20 years.
The old cliche - location, location, location
Remember how we said not any old house will do - this is also true for location.
Whether you’re looking to renovate and sell, or be in it for the long term, you need to find a suburb where people want to live, and are prepared to pay a premium to live there. This will ensure good occupancy rates (not ever having your property empty for too long) and also an above average weekly rent, as well as your pick of quality tenants.
For a riskier investment (and perhaps more experienced property investors) you could always purchase a property in a less desirable suburb, for a cheaper price, if you can see that it is likely to grow in popularity over the next few years.
A few other helpful things to look out for are: neighbourhoods that are starting to see renovation activity, new businesses/amenities are popping up nearby and places which research shows has limited rental supply.
Money matters
So you’ve got a deposit together for an investment property - that’s awesome. Now what about a buffer for any unoccupied periods, maintenance, rates, large unexpected repairs…?
Yes a property investment can bring you money in, but it can also see a lot of money going out, so you need to make sure you always have a buffer in place to cover those costs - as it would be a disaster to have to sell up quickly (especially if it was a buyers market).
Don’t be afraid to ask for help
Pride comes before a fall - so don’t feel like you’ve got anything to be ashamed of when asking for help from the professionals. The great thing is, there are plenty of people around to assist when it comes to getting the best return possible from your property investment - so why not use it to your advantage.
From an expert accountant, to a property finance specialist, and expert investors, these are the right folks to have on your team if you want to do well from owning one or more rental properties.
4 final quick-fire tips:
- Know what you’re going into the market for - is it to save for retirement? And if so, how much do you want to have, and by when? Planning is key.
- Advice is everywhere, but it’s not always right - every person and their dog has advice about property investment, but there are a select few who actually know what they are talking about. Make sure you employ their services to steer you in the right direction (ensure they are impartial parties to the investing as well).
- Keep your emotions in check - there is no place for ‘feelings’ when it comes to property investment. You’re not buying a house to live in yourself, so leave your emotions at the front door.
- Understand the hard work comes after the purchase - once you’ve bought an investment property, that’s not just where it ends. You now have a house to maintain, and tenants to manage - sometimes it is easy, and sometimes it is actually really difficult.
------------
Need to find the right tenants for your investment? Use our guide to help you keep the risky ones away!
