In Part 1 of our checklist we looked at the importance of having the right frame of mind when planning for residential property investment, doing enough homework to make sure you have a solid understanding of the property investment market, getting professional assistance when you need it, and being financially ready to embark on buying your first property. In part 2 we’re going to look at some of the practical matters of property investment.
Finding The Right Investment Property
As part of their property investment tips, most professional investors will suggest that finding the right property can be the difference between building a successful portfolio and owning a property that may not fulfill any of their financial goals. Choosing an “investment grade property”, that is, one that will provide maximum return on an investment is critical. Most property experts agree that a number of factors make an investment grade property, including:
- Location – areas in and around major capital cities have been shown to have the most capital growth over a 10 to 15 year period, as well as be the most attractive to tenants.
- New developments – off the plan and brand new apartments provide many advantages to the first time investor, including favourable deposit terms, regular income from high quality tenants and lower ongoing maintenance and repair costs. These days new apartment complexes also tend to come with a range of attractive facilities such as swimming pools, gardens and bbq areas that increase the development’s overall value and attract tenants.
Becoming A Landlord
Owning an investment property generally means being a landlord, with all the role’s responsibilities and legal and regulatory requirements. A residential property investment will mean setting an appropriate rent and bond, finding good tenants, and being responsible for maintaining the property inside and out. Because they understand how time-consuming it can be, professional investors tend to use property managers to take care of the day-to-day running of their residential property investments. This means that instead of worrying about their property they can focus on their long-term strategic plans.
Choosing a good property management company means finding one that has local knowledge, provides regular inspections and annual rent reviews, maintains regular contact with tenants and is prompt and efficient when emergencies occur.
When To Sell Your Property Investment
Just as there is no magic time when to buy property, there is really no perfect time to sell an investment property. Professional property investors recommend that having a 10 to 15 strategic plan that includes time for regular reviews will help enormously in helping someone decide when they should sell and maximise their profits. This means that personal circumstances and strategy may matter more than local market fluctuations, although of course to sell in a rising market with high demand is always more preferable than selling during a downturn. Don’t forget that you may not need to sell your property at all: some experts believe that one of the best ways to increase wealth is to in fact hold on to your investment, and use from the equity built up in the property to purchase other investment properties and creating a sustainable portfolio.
First time property investing can be a challenging undertaking, but you don’t have to do it alone. Getting assistance and support from residential property investment professionals is crucial in avoiding some of the mistakes that first time investors often make.