The most successful people know that to achieve their goals, they must have a strategy in place. Being a landlord is no exception. If you want to achieve your investing goals, whether that’s owning one property or 5, start with the big picture plan and break it down into annual, monthly and weekly tasks.
If you are new to property investing, you may need to connect with an expert and employ the services of a property investment strategist to help you.
A good property investment advisor will be unbiased. They will not be trying to sell you something. They will give you honest feedback, and develop a strategy that is aligned with your financial goals, your risk profile and also aligned with your current bank balance.
Here are a few things to think about that will help you determine who will be the best fit for your needs.
Most advisors probably have their own investments so start by asking them about their track record. Find out when and how they started, what they like to invest in, how many properties they own, what mistakes they made etc. Finding out this information should provide you confidence and encouragement about their abilities.
Having their own investments is not essential, however. Regardless of whether they do this for themselves, you’ll want to see testimonials of other clients they have helped. Do your research and find out what other people have to say about them.
Investment techniques change over time as markets change. Find out how they recommend structuring investments and the techniques they use for maximising equity and cash flow for their clients.
Hiring an advisor is a big step in your investing success. What tips do you have when choosing the person who is the right fit for your unique situation?
Some things don’t change when it comes to choosing the right investment property. Here are some tips for newbie investors:
Buying in the same area you live in is often preferable, especially for a new investor, as it is easier to keep an eye on the property. Driving past the property regularly will help you stay on top of any potential problems. The location of the property is generally more important than whether it is a house or a flat.
Three or four bedroom homes are usually easier to rent and normally have a quicker chance of resale should you need to sell anytime in the future. Double income properties, for example, homes with a granny flat, often offer excellent rental yields. If you lease these at different times, then you won’t be down double income if both are vacant.
Look for properties that have an X factor. Can it be extended? Is it sub-divisible? Is its location superior? Look to the future as to what you could do with the property. Low maintenance cladding materials on the exterior of the home will help to reduce ongoing maintenance costs. Maintenance is not something you should take lightly.
Develop a relationship with your Mortgage Broker and Buyers Agent. They will save you time and money. Speak to them regularly about your future investment plans. Make sure organise your finance before you actually sign the agreement to minimise the conditions applicable. So many people forget to do this. Always keep accurate, complete and tidy tax records. Highly important!
Spread your investments. Target some properties with high yields and low potential for growth, and also target properties with lower yields and a higher potential for growth. A balanced portfolio is always a good idea. Make sure you follow a plan so you know what sort of property you will be buying next and why it will work for you.
Always be nice to your tenants. They will be nice to you in return.And always respond quickly to a tenant request.
Review your rental rates, both up and down, on a regular basis and according to the market. Work with your Property Manager to help you with this. Your property manager will have the market information and experience to help you to make the right decision for your investment.
If you are starting out in property investing, you need to keep an open mind. When you think of options you want to invest in, you more than likely want a 3 or 4-bed stand alone house with a large backyard in a good suburb that is located near amenities.
There are other options and they may work out better for your situation than a stand-alone house. Have you considered an apartment in a high-rise closer to the centre of town?
Pros for owning an apartment:
- Lower in maintenance costs than a house, and if you purchase several apartments in one block, then it becomes cost-effective when maintaining all of them at the same time.
- Higher rental income is often a possibility, due to the proximity to the center of town and the added benefits of a gym or pool in the apartment building.
- If you own more than one property in the apartment complex, you might be able to have better leverage for future property purchases.
Other things to consider:
- You need to know the area that you are looking at buying in and become an expert. You need to be familiar with who your ideal tenant is. What do they like? Where do they work? How long do they generally stay in the area?
- Do you know all the costs and fees involved? Car parking, storage fees and ongoing annual fees. Make sure there are no surprises and that you factor these into the costs.
- Who is going to manage the property? If you are, do you know how to do it? If you are going to employ a property manager, make sure you partner with a reputable one – we are not all built the same.
As our population grows, so does high-density housing. This means that if you are considering buying property, it may work out for you to consider an apartment to add to your investment property portfolio. Contact us if you would like to know more about our property management services.
When thinking about what to invest your hard-earned money in, you want to pick something that will get you the most ROI. Everyone wants to make money from their investment. When you have made the decision to invest in property, the next question is “Should I invest in a house with a backyard or a one bedroom apartment?” The answer is never a simple ‘yes’ or ‘no’, but rather ‘it depends’ – it depends on the property, it depends on your budget and it depends on the location.
Investing in a stand-alone house
Houses have better potential for growth. Land will always appreciate and there is more land attached to houses than apartments. Land is also in short supply. In following the principle of supply and demand, this means that good growth follows.
There is also a greater capacity for development. It is possible to increase the market value of a house through decorating, landscaping, extensions and remodelling. The same scope for improvement is not present in an apartment. And there is potential to sub-divide, cross lease or sell a well-located property as land becomes more sought after.
Investing in an apartment
Apartments have cheaper maintenance costs than the upkeep of a rental home. They are easy to rent with the draw of inner city living, transport efficiencies, easy care lifestyle.And there is less investment capital required when compared to a house.
Which one suits your investment portfolio better, a house or an apartment? Some new investors think that choosing a house is ‘essential’ in building their investment portfolio. This is not the case. It depends on your investment strategy – how you want to invest and what you plan is with the properties. You may find that you can build a portfolio faster with apartments than what you would do if you concentrated on houses alone.
What is your investment strategy? Will you buy houses or apartments for your portfolio or a combination of both?
Some things never change when it comes to investing in property. I’m sure you’ve seen these tips before, this is just a reminder list for you.
- Buying where you live, is usually preferable, especially for a new investor as it is easy to keep an eye on the property. Drive past the property on a regular basis to be aware of any potential problems, and relieve any new landlord anxiety.
- Three or four bedroom homes are usually easier to rent and normally have a better chance of selling should you need to sell any time in the future.
- Low maintenance cladding materials on the exterior of the home will help to reduce ongoing maintenance costs. Maintenance is not something you should take lightly.
- Double income properties, for example, homes with a granny flat, often offer excellent rental yields. If you lease these at different times, then you won’t be down double income if both are vacant.
- The location of the property tends to be more important than whether the property is a house or a flat.
- Properties down a right of way are difficult to inspect from the road.
- Look for properties that have an X factor. Can it be extended? Is it sub-divisible? Is its location superior? Look to the future as to what you could do with the property.
- Organise your finances before signing an agreement to minimise the conditions applicable. So many people forget to do this.
- Set yield criteria for your property purchase. Try to achieve a rental yield higher than the rate of interest.
- Develop a relationship with your Mortgage Broker and Buyers Agent. They will save you time and money. Speak to them regularly about your future investment plans.
- Fixed interest rates reduce risk. Floating interest rates create flexibility. You need to know what works for you.
- Keep accurate, complete and tidy tax records. Highly important!
- Spread your investments. Target some properties with high yields and low potential for growth, and also target properties with lower yields and a higher potential for growth. A balanced portfolio is always a good idea. Make sure you follow a plan so you know what sort of property you will be buying next and why it will work for you.
- Make your investment property loan interest only if you still have a mortgage on your home. Make all the principal repayments on your home loan, as this is not deducible. Make sure you work with your accountant and financial planner when doing this, to make sure it is the right thing to do.
- Use an accountant for your tax work!
- Always maximise your depreciation claims by having your chattels valued regularly.
- Be nice to your tenants. They will be nice to you in return.
- Always respond quickly to a tenant request.
- Review your rental rates, both up and down, according to the market. Work with your Property Manager to help you with this.Talk to your Property Management Company. They have the market information and experience to help you to make the right decision for your investment.
One of the keys of being a successful property investor is getting to the property before the competition and getting the property under market value. But how do you do that? It comes down to planning.
Research and Planning
You need to do lots and lots of research! The numbers don’t lie and you need to have accurate historical data to make informed decisions. Some (but not all) of the areas you need to cover in your research are:
- Median price in the suburb that you are investigating – past 12 months, 5 years and 10 years
- Track property sales in the targeted suburb. Which ones are going to auction, which are being passed in. Ask for price guides from agents. (Keep a closer eye on comparable properties)
- When you are looking at a particular property, find out what it last sold for, when and how long it stayed on the market.
Consider a buyer’s agent
They are on your side, they are trying to get the best deal and they take the emotion out of it all. Send the agent to auctions to ensure you don’t get caught up in the excitement and go above your budget. They will also be an expert in the areas that you are looking at, and from their experience they will be able to give you a general idea of what a property is worth.
Make an offer
Sometimes you might want to put in an offer before a property goes to auction (if that is where it is headed). Some vendors may want to skip the auction stress altogether and jump on your offer. Also, have a good negotiation strategy – not offering your top dollar first off is a good move.
Know when to walk away
There is always going to be another property around the corner. So if you miss out on one because it has gone over your budget, don’t worry another one is on its way. Plus, you never know, the vendor may not be able to sell their place for their asking price and may get back in touch.
What other things can you do to snap up a bargain?
We all have to start somewhere, getting started is the hard part. Where do you start?
The very first step to property investing is researching. You need to know your market so that you can effectively compare properties and know when you have a deal or not. So take the time to do reading, researching and talking with people in the know.
Tips for getting started in property investment:
Know the Market
If you don’t understand the market, you won’t be able to make educated decisions.
You need to be very clear about your short and long-term goals. If you don’t know where you are going, any road will get you there.
Have a plan
Know what your strategy is going to be. Don’t change your mind once you have decided. If you change your mind half way, your results will be less than you hoped for.
Know the Risk
There are always going to be a risk when you invest in property. Investing in property has been a wise investment for a very long time, so know that in the long run it’s very likely you will come out ahead. But not always!
Stick to the facts
You are not living in the property, so don’t look for properties you love, look for properties that will give you the best yield.
Location, Location, Location
Buying close to schools and shops is a pretty safe bet when looking at investment properties. Especially a first one.
So get the right advice, do the research and follow your strategy and one day you may wake up and be a property tycoon!
What do you think, what would your best advice be for a new property investor?