Eight-point guide for first-time investors
Property investment is a proven strategy for building personal wealth, as it allows you to experience long-term capital growth, rental income and attractive tax incentives.
As an experienced real estate agency in your area, we always recommend you seek professional financial advice before embarking on a property investment strategy.
To inspire your thinking, here’s an eight-point guide to help you consider some of the key issues when deciding if being an investor is for you.
- Motivation – The best purchases deliver capital gain – that is, the property gains in value over the years. Buying only for yield – rental income – can prove a disappointing investment if the property isn’t gaining in value.
- Supply and demand – Conduct your research to ensure you’re not buying in an area that’s about to be flooded with new accommodation. This is important if you intend to buy a unit. A new development will soak up potential tenants and drive down both rents and values in the short to medium term.
- Renovator’s delight – This is a popular way to enter the market as an investor. You’ll buy at a lower price but take on the expense of getting your property into shape. Before jumping at this bargain, ask a builder to check what needs to be done and get a price.
- Upgrade ideas – If you’re looking at a unit that needs changes to make it rent-ready, check if you’ll need the approval of the strata committee or body corporate, which has responsibility for the building. You may also need to check with the local council.
- Neighbours – Ask the selling agent about neighbours in the apartment block. Owner-occupiers take more interest in the maintenance of the building and amenities. Ideally, renters won’t occupy more than 30% of the units.
- Potential renters – Consider the location and the type of tenant you’ll attract. If you offer a well-pointed apartment, you’ll get excellent rent and enjoy capital gain – the best of both worlds.
- Be detached – Many experienced investors will graduate from units to houses, seeking more significant land value gains. Be aware that land is an appreciating asset while buildings depreciate, often requiring renovation and even replacement.
- Property manager – A manager will look after your investment property for between 3-8% of your rental income. They’ll set the rent, help select a tenant and manage any day-to-day challenges and send you a summary at tax time. That makes your role as an investor worry-free.
Whether you are looking to add to your investment portfolio, buy your first investment or need a health check on your current commitments, Clarke & Humel have the experience and expertise to get the best out of your investment and provide sound strategic advice. Click to contact us or call 9977 3300.