Investing in property can be an exciting yet tedious experience. Be resourceful, know the facts and make confident decisions. Here are 10 top tips for buying investment properties:
Location
It can't be stressed enough, opt for the worst house in the best street. You can always improve the property but improving the street is near impossible. A desirable street will attract desirable tenants and there is less chance of being adversely effected by property slumps.
Don't go overboard on renovations
Although that granite top bench is simply amazing, these kinds of pricey extras really push your renovation budget and this is money you can't get back. Opt for neutral paint, new carpets, new drapes and keep the renovations to a minimum. For instance, avoid replacing the whole kitchen if repainting cupboard doors and refinishing the bench top will suffice.
Avoid flipping
To avoid risk with today's market, aim to buy and hold your property. 5 years is a good time-frame to do so. The risk is minimized and the return maximized.
Aim for long term investment
Long term investment is less risky and requires less effort, it makes a good supplement to your current income and is a great option for small investors. Having time to ride out lows in the market can save protect you from big losses too.
Have cash available
Not only will you need it for renovations, most lenders will also require at least a 20% deposit on the property. So plan to have cash in the bank first.
Calculate the real cost of ownership
This includes everything from the property cost, to mortgage payment, rates, utilities, repairs and any other expense that may come up whilst you own and manage this property. Keep track of every dollar that is spent so you know where you are financially.
See the property for what it CAN be
One common mistake made by new investors judging the current state of the property. To get a feel for the house, try to see what it could potentially be like with a bit of work. The next question is just how much work would be involved, use your imagination when viewing properties.
Hire quality workers
Find quality, skilled workers that are still affordable. Don't take shortcuts when renovating but do use your initiative. For instance do the landscaping yourself, but leave painting the exterior of the house to a professional.
Know your rights as a landlord
Learn everything you can about being a landlord so you are prepared for the good the bad and the ugly! Learn the bond requirements and eviction process and never be scared to ask for advice when it comes to dealing with troublesome tenants.
Enjoy the benefits of your investment
After all the hard work you finally get to enjoy the benefits of owning an investment property. A passive income now and later down the track provides a good financial foundation and sense of security. Learn from each property investment and you'll be well on your way to being a successful investor!
A blogger based in New Zealand. She is always keeping an eye out for property investment, and loves to keep up to date on the latest developments in real estate investments.
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