Buying property is a daunting prospect; most of us only do it a few times during our lives. It takes courage to become a property investor and there is no shortage of information available and just getting through that data can be difficult.
We have put through a short list of our top hints and tips to start you out on your investor journey:
1. What is the destination?
As we know buying property can be a confusing experience, but investing in property is not like buying a home. When buying a home you certainly would like to see some long term appreciation but primarily you want home for you and your family.
When dipping your toe into property investment you need to be clear as to what you are trying to achieve and focus your strategies on achieve those goals.
Are you after long term capital grow or a short term investment? Once you are clear what the objective is it becomes easier to map out how to get there.
2. Time to hit the books.
It takes a lot of time and patience to understand the real estate market and you most certainly will not become a millionaire overnight and even with a clear plan it can be a perilous journey.
The way to make the journey smoother, with fewer bumps in the road is to do plenty of research.
Get familiar with the area that you are looking to invest in. Look at the demographics of the area in which you are looking to buy, excellent data can be found through the Australia Bureau of Statistics. The more you understand those that are looking to lease properties in the area the more likely you can select a property to purchase that will yield a good return.
3. Show me the money
Step 1 – buy a house. Step 2 – perfect tenants rent it and pay above market value. Step 3 – nothing goes wrong, ever.
Sounds simple doesn’t it?
The fact is that things will go wrong and you should be prepared for that. Being prepared means understanding the costs that can be incurred.
Can you afford the property if it is vacant for a long period of time?
Things break on properties and as a landlord you will be responsible for some of those items. Some experts recommend having a contingency set aside of approx. 10% of the property value for items such as maintenance, management fees, land taxes, insurance etc.
4. I don’t have the time.
You can save a lot of money in management fees if you chose to manage the property yourself. But it can be very time consuming.
Using a property management does add expense but can save you countless hours in running around and negotiation.
Ensure that they are licensed and insured and remember that they do not have to be from the agency from which you purchased the property.
For more tips on selecting an agent see the blog here
