Here are some important
considerations when looking to
invest in property:
1
Know your strategy and invest with that
in mind: If you are buying to rent, you
need to know what the realistic rental
income for the area and type of property is,
how much you need to spend on any required
repairs or maintenance, commissions due to a
rental agent, and then cover your transfer and
bond costs, taxes, interest, insurance and so
on. You may have some shortfall initially that
you need to cover, but over time the property
should be giving you a healthy return. Ensuring that you have a steady rental income is
important as the cash flow will make keeping
the asset more affordable. Also make sure that
your property suits the demographics of renters
in the area – an open plan family home with a
large garden won’t perform in an area close to a
university unless you plan on converting it to a
student digs! If you’re buying to flip – renovate
and resell - you need to know what your costs
are to renovate, what the potential selling price
could be based on similar properties in the area.
2
Make sure you can afford it: Investing
in property is a long term strategy, so be
sure you can afford any bond repayments
and costs over the long term. If the property
stands empty while you look for a trustworthy
tenant, can you manage the repayments? If
your renovations take longer than expected, or
the property does not flip as quickly as you had
planned, can you carry the costs in the interim?
Make sure you factor in costs such as rates and
taxes, maintenance and capital gains tax into
your budget.
3
Get a good rental agent: A rental agent
or licenced real estate agent that is experienced in managing rentals is an as-
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set and will go a long way in managing things
for you and your tenant. They will thoroughly
screen the tenants to ensure they have a good
payment record and can afford the rental.
Once a good tenant is found, they then also
provide advice on contracts, rental rates, your
rights and responsibilities as a landlord, sort
any maintenance issues and do regular checkups to ensure that your tenant is looking after
your property appropriately.
4
Research the area you are buying in
thoroughly – Estate agents and bond
originators will be able to assist with a
roll of all property sales in the area for you to
compare against and you can also arrange for
an independent valuation to be done if you are
unsure. Banks have valuable data on property values in different developments and areas
which is helpful in ensuring that you don’t pick
the wrong investment property. Estate agents
can also assist you with determining the potential for rental income based on other rentals
in the area.
Check out the local amenities that would
make your property more appealing to tenants
or buyers. Are there open stands in the area
which could be a hotspot for crime or property
developments that could impact the future
value of your investment?
5
Make the property attractive to renters
or buyers: Whether you’re planning to
rent the property out or flip it for profit,
make the property attractive to whoever is going to live there. Stick to neutral colours and
keep the bathrooms and kitchen in good condition. A well-kept property will attract better
quality tenants, and if you’re reselling, a buyer
will more easily be able to see themselves in
the property if it does not have your personal
signature stamped all over it.
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