What You Should Know Before Investing in A Rental Property
With the rise in popularity of property investing, it is tempting to take the plunge and purchase a rental property yourself, to avoid ‘missing out’. However, as with any long-term financial investments, decisions should not be taken lightly without proper research and Property analysis. Property Investing can cause you more harm than good, especially when the property is not generating the ongoing returns you need.
What are some of the key considerations before you invest in a rental property?
Firstly, you should determine what your budget is based on your financial situation. Most of us will need to borrow, however, it also depends on your current income and the amount you can afford to borrow. It is a large financial commitment so plan ahead. You should also consider other ongoing costs associated with the upkeep of the property, as well as your projected long-term employment and income.
Target Demographic and Area
With your budget in mind, think about the type of tenants you wish to target and the area suited to the demographic. If you’re targeting families, look for areas with suitable facilities such as local parks and schools, and properties with a practical floorplan suited to families. Bear in mind that your rental property is not for yourself to live in, so try to stay objective and view it as a business transaction. Just because you don’t like the colour of the walls, doesn’t mean it can’t be a good investment property.
Again, when looking into areas that suit your demographics, don’t forget to investigate the potential growth, especially in the long-term. Are there new developments such as major shopping centres being built, or new schools being established? Will there be a range of facilities and amenities nearby? Research on the rental vacancy rates and buying/ selling trends to give you a clearer idea.
Property Maintenance & Management
To minimise costs in the upkeep of your rental Property analysis, don’t forget to consider maintenance issues associated with older properties. Have the property professionally evaluated on its structural integrity and identify other issues that may arise with age. For a new property, consider selecting materials that are hard-wearing or low maintenance, such as tiled floors. Decide whether you want to manage your own property or have a property manager act on your behalf. Whilst you might save on costs managing the property yourself, sometimes it might not be possible if the location is too far, or it might suit you to have a third party as mediation should any tenant problems arise.
Investing in property is an exciting process though it can be daunting for many of us, especially when we don’t know where to start. It is a good idea to enlist the help of a good investment property advisor, so you can start on the right foot.
Invest Hibbards can help. Our investment property options provide affordable quality investment properties strategically located in high return communities, delivering the benefits of a well planned and executed investment strategy. We help you determine your financial situation, and show you how you can enter the property investment market with confidence. Our services are based on –
Education + Quality Investment + Simple Systems = Success