What to consider when investing

When it comes to investing in property, it’s a very different proposition to buying a forever home or property you intend to live in.

Ideally, an investment property will serve you in both the short and long-term, providing an ongoing source of income for the foreseeable future while offering a capital gain in the long run.

So what should you be looking for? Here’s a brief snapshot of what to consider when investing…

Have a plan

Purchasing an investment property should be weighed against your greater financial plan and the outcomes you hope to achieve in the short and long-term.

In other words, how will this property fit in with your financial strategy and greater life goals? Is it to generate immediate income in the form of rent?

Will you be using it to offset your tax bill via negative gearing? Or are you looking a little further down the line and seeking to invest in a property which will increase in value over time?

Before you start the investment property search, it’s important to understand exactly what purpose your investment will serve and how that will impact your finances moving forward.

Know the costs

Investment properties are a little like running a business. On one hand they generate income in the form of rent, but on the other, there will be inevitable outgoings.

These include:

  • Purchasing costs such as pest and building inspections and stamp duty
  • Mortgage payments
  • Rates or body corporate fees
  • Property management fees
  • Maintenance and repairs
  • Insurance
  • And more.

It’s important to budget for the expenses from the outset and be mindful a little leeway might be required.

In some years, required repairs might be few and far between, but in others, something significant might break or circumstances might see your property vacant for a longer period than you’d hoped for.

Do the research

Regardless of where you intend on purchasing, it’s essential you do the research on that area and the rental market.

That research might include asking the following:

  • What type of properties are sought after by renters in that area?
  • What’s the current vacancy rate?
  • What price do properties in the region command?
  • What’s the demographic of the region?
  • Which industries provide employment? Is there more than one? And are those industries stable?
  • What future infrastructure is planned for the region?
  • How will any potential developments affect housing supply?

Consider the renter

As we mentioned before, owning a rental property is a bit like running a business, so it pays to consider your ideal client.

And by that, we mean the ideal renter who will be residing at your property.

Looking at a property from the perspective of the person who will potentially be living there helps narrow down the things they might need, and the additional features they might be willing to pay more for.

Head over heart

One of the key differences between purchasing an investment property and your forever home is the fact buying an investment should never be an emotional decision.

Instead, it should be carefully considered and well-researched while also weighing up all the financial implications, including best and worst-case scenarios.

How we can help

Our experienced property managers pride themselves on establishing great relationships with both rental occupiers and owners.

We manage every property as if it were our own and you can learn more about our property management services here.

Alternatively, if you are looking to rent a property, you can view the properties we currently have available here.