Do you feel like you might be ready to take the next step into the property market and purchase an investment property?  Before deciding if this is the right step for you, it pays to do some research so you can make informed decisions. 

Researching and finding the right investment property can take time. To help you, we have pulled together a list of the things we think you should know. This will come in handy for when you are getting ready to take such a big step in order to feel prepared and informed. 

 

Think about your main objective and be aware of the risks and the benefits  

 Ask yourself what you want out of this, why do you really want to be an investor and what do you envision as the end goal.  Is this the first step in creating an investment portfolio? Do you want to buy local or is there a property or market in a different location that you are looking at? 

There is a lot to consider and you need to be clear on expectations and goals. 

It can be easy to let your emotions guide you but in this case, you do want to think logically and be aware of the risks and be prepared. 

Risks such as 

  • Increases in interest rates and council rates 
  • The possibility of any expensive repairs and maintenance
  • Shifts in the market 

You don’t need to dwell on these risks alone, but you just want to be prepared and not caught off guard as well as ensure that there is room to move with your finances. 

 

An investment property can be one of the best decisions you make for your future, if you work with an experienced team who can help you navigate the process. 

Some of the benefits of having an investment property include

  • The property may rise in value 
  • Consistent income from long-term tenants 
  • Any tax deductions that may be applicable 

 

Find out what makes a good investment property. 

 Have a look at the local market and see what is happening at the moment. Do some research and look at what locations are desirable and the target market of people you wish to rent to. 

Do you want to start small with an apartment?  Or do you wish to target families and therefore need to look at 3 or 4 bedroom places?  Is the location of the house going to appeal to potential tenants so that it does not sit vacant costing you money? These are all things you need to consider when looking at potential investments. 

Research the average rents in the areas you are looking at and where it might be heading over the next few years and what impact this may have on your investment.  

The challenge of purchasing a fixer-upper with the intention of doing it up and then renting it out may sound great however, can be very time consuming, stressful and require a lot of energy and commitment. Are you realistically in a position to do this?  Or is it going to be more beneficial to look at a property that requires minimal work and is ready to list on the rental market straight away. 

You may also wish to consider the age of the property. Older properties typically need more upkeep and maintenance due to long term wear and tear and age as things start to break, costing more money.   

Even though you may not be intending to live in this property, someone will be. You will still need to think about the features that people usually look for in a home. Such as the number of bathrooms and car spaces.  Is the general layout and design of the property good for everyday living? All of these things contribute to how desirable the property is. 

 

A good Property Manager is Important 

 Trying to undertake the management of an investment property yourself takes a large amount of time and energy. To make this process smoother and less stressful it can be wise to hire a property manager that can do all this for you. However, it is definitely worth spending some time researching what you should be looking for when hiring a property manager. 

They will help you determine what you should be charging for rent and handle any issues that may arise. A good property manager can make for a stress-free experience.            

Understand all the Financial Implications and Expenses 

 Buying property can be a great investment in your future, however it is also a very large financial commitment. You need to be aware of all the financial implications. 

 

You will need to take into account things like 

  • Tax implications 
  • Rates 
  • Insurance 
  • Maintenance and repairs 
  • Strata fees if applicable
  • Property Management costs 

Variable costs such as maintenance and repairs can be harder to predict so you do need to allow some room for movement. You will also need to allow for increases in ongoing expenses like insurance premiums and rates each year. 

You will need to look at all the long-term financial implications, these may vary depending on how long you plan on keeping the property. 

Talk to professionals 

When making a big decision like this it is always good to talk to professionals and people with experience. In this case you may want to talk to people like Real Estate Agents, Financial Planners and Accountants. They will have a wealth of experience and information to help you make informed decisions. 

A Real Estate Agent will be able to give you an idea of how the market is performing. Talking to an Accountant is important because they will be able to help you understand all the financial and tax implications.  A Financial Planner will be able to help you plan so that you can make the most of your investment. 

 

If you feel you are ready to purchase an investment property, speak with one of the NXT GEN Property Agents. We are a locally owned and operated real estate with over 35 years of experience and local knowledge behind us. So not only do we know the industry, we also know the local Townsville property market.

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