Top Tips for First Time Property Investors
Diving into the property investment pool for the first time can seem daunting at first, but once you’re in, more often than not you’ll be better off for it. But to make sure of that, you have to do your research first, fully understand what you’re getting into and make smart decisions.
If it all seems like too much work and you have no idea where to start, as property investors ourselves, we’ve come up with a few handy tips to help you feel confident about your property investment decisions and guide you on the right path towards a profitable investment outcome.
Know Your Financial Objectives
What exactly do you want to get out of your property investment?
Without first setting financial objectives, how will you know if your investment venture is worthwhile and will be financially viable? Set tangible targets for your return on investment, cash flow and time frame. You should also focus on both short and long-term goals and make sure your investment decisions align with your overall financial strategy.
Once your financial objectives are set, you’ll gain a better understanding of the type of property you need to buy in order to meet your income goals.
Plan Ahead & Do Your Research
To know exactly what you’re looking for before starting the property hunt, you first need to do your research to see which suburbs are experiencing growth, what the average rent is in different areas, the best time to buy and the state of the property market overall.
A good place to start is to look at suburb profiles online. Here are a few websites that do them:
Before you get too serious, you should also get yourself out there and go to a few open homes to see firsthand what the market is like and the type of properties available within your price range. And most of all, don’t rush into buying the first property you see. Good things take time, and the same can be said for investing in property. Without taking the time to do the necessary research and planning, you risk making a poor purchase that doesn’t fit your financial objectives.
Buy Within Your Means
After working out your financial objectives and undertaking your research, you should have a pretty good idea about the price range you should be buying in. Remember the price range you come up with should be realistic, so you can comfortably earn your money, pay the bills and support your family. If you’re putting yourself out too much, it may not be worth it.
When working out how much to pay for your investment property always factor in:
- Your deposit
- Current interest rates
- Mortgage repayments
- The rent you expect to gain
- Money for property repairs and upgrades
- Potential vacancy during tenancy turnovers
- Management fees
- Other: Rates, Stamp Duty etc
Think with your head and not your heart when buying your investment property. It can be easy to get carried away. Remember this isn’t a property you’ll be living in, so instead of finding a place you’d love to live in yourself, you instead need to consider the factors that will get you the best possible return on investment for the price you’re willing to pay.
This could include location, the condition of the property, number of bedrooms and bathrooms, as well as distance to local shops and transport just to name a few.
Invest in Your Property to Get the Most Out of It
If you buy an investment property that’s a little run down and needs some work done, always fix up whatever you can before opening the property for inspection. Not only is it the right thing to do to ensure it’s comfortable and livable for your tenant, but it also makes it easier to find a quality tenant.
By improving your property you’ll also be able to increase your rent and make a better return on your investment. That’s why it pays to set some money aside ahead of time to get all of this out of the way before any potential tenants walk through your doors.
Picking the Right Tenant
Having a well-presented property in a good area will always go a long way towards helping you get a quality tenant that you can rely on. But you can’t depend on these factors alone. Your Property Manager should have a thorough application-checking process.
An example of the types of question that should be covered can be seen in our tenant application form.
Regular Property Inspections
Once you’ve locked down a tenant and you’re beginning to generate a regular rental income, the work doesn’t end there. It is important to make sure your property is in good condition and is being taken care of. Regular routine inspections are vital.
If you’re conducting the property inspection yourself, remember to abide by the laws. In Queensland a landlord/property manager needs to provide at least seven days’ notice before entering the home for a routine inspection. The inspection should be either at a specific time or within a two-hour window.
But in saying this it’s also important to maintain a harmonious relationship with your tenant. Remember a home is to be lived in, so if the tenant is paying rent regularly, there’s only a little bit of mess here or there and there’s no damage to structure of fixtures, there’s no need to fuss. Pick your battles, because while it may be your house, it is still their home.
Get Help from The Professionals
Having an investment property is like having your own business. A lot of time and effort goes into it and if you don’t have the time to dedicate towards everything involved, it’s best to hand the responsibility to the professionals. Professional property managers take care of investment properties for a living and are more than capable of handling the necessary tasks on your behalf.
At Beyond Property Management, we are investors ourselves, so we completely understand what you expect from us and make sure all the boxes are ticked off your list, from getting the perfect tenant right through to conducting thorough property inspections. Give us a call on 07 3188 7651.