Since not all investment properties are the same, it’s important to determine what type of property fits your requirements. Do you want to become a Residential Rental Provider (RRP), or would you rather restore and resell properties? Are you interested in apartment buildings and other commercial real estates, or in buying land that can be developed?
We recommend speaking to a qualified Financial Planner who can give you advice as to which is the best strategy for you.
If you're thinking of investing, here are some tips to help get you started.
First time investors should speak to a real estate agent who you have faith and confidence in, who is experienced in investment property deals and can help to locate promising properties. A second option is to collaborate with a trusted, more experienced real estate investor and close a deal together.
Buying investment property is an entirely different experience than buying your primary residence. When you go to buy your own home, you usually have emotions in it but when you go to buy an investment property – you need to put all that aside and look at it as a business transaction – What’s the best option that will get you the best return?
If you buy a property with hopes of renting it out, location is the key. Homes in areas with a low rental vacancy rate or highly-populated areas are ideal; stay away from rural areas where there are fewer people and a small pool of potential renters.
Speak to an agent who looks after rental properties in the areas you are looking to work out what sort of properties rent the fastest – in some areas, for example, areas near universities, 1-2 bedroom apartments might be the most desirable, in others, family homes could be in strong demand.
Think about potential selling points for your property. If it’s near public transport, shopping or other amenities, it will attract renters as well as potential buyers if you decide to sell later. The more the property has to offer, it’s more likely to appeal to potential renters.
Speak to your lender or financial planner about whether you have enough assets to handle the ups and downs that could come with investing. Even if you plan to rent out the property, count on paying the mortgage whenever the property is vacant. If you’re planning to fix up a home and sell it, you could end up holding onto it for several months before you sell.
Research other similar property sales in the area, to ensure you are not paying a premium for the property. You can use the Property Research section on this website to look up recent sales and median prices in Victoria.
If you intend to rent it out, choose a low maintenance property that will be easy to maintain. Ensure it’s well built and free from building defects.
Talk to your financial planner about other ways you can potentially save, for example, depreciation on certain items in a rental property.
Managing a rental property successfully is a little like running a small business. There are outgoings and incomings to be balanced, taxes and rates to pay, assets to develop and client/customer relationships to be built and maintained. Private RRPs often take on the management of their property without fully appreciating the time, commitment and level of expertise necessary to run this small business. This sometimes leads to disaster.
Renter selection, rental collection, property inspection and dealing with tenancy lease breaches, are all processes which, in the hands of the inexperienced, can prove to be expensive both in terms of time and money.
All of Barry Plant’s property managers firmly believe that a property should not be regarded as simply a source of rent, but as a valuable and appreciating capital asset.
Many private RRPs do not understand the legal responsibilities that go with managing rental properties. Recent changes to the Residential Tenancies Act now make the process even more difficult for those without professional experience. It makes sense, from a risk mitigation point of view, for private owners to put the management of their most valuable asset in the hands of experts.
All our Property Management staff are well versed in the legalities of property management and in the unfortunate event that a renter should breach their contractual obligations, they will prepare the necessary paperwork and applications to the Residential Tenancies Tribunal and will even represent you at the Statutory Tribunal Hearings.
By placing your property in the hands of Barry Plant accredited Property Managers, you receive a total management service which will protect your investment and enhance its ongoing appreciation.