So, you’ve decided property is your strategy for creating wealth or you’re thinking about purchasing your first investment property. It’s an exciting but daunting proposition – we get it! That’s why we’ve called on investment property expert, Natalie Abbott, Principal at Property Manager Adelaide, to share with us her top property search tips.
“Don’t wait to buy real estate, buy real estate and wait.”
Robert G. Allen
So, you’ve decided property is your strategy for creating wealth or you’re thinking about purchasing your first investment property. It’s an exciting but daunting proposition – we get it!
That’s why we’ve called on investment property expert, Natalie Abbott, Principal at Property Management Adelaide, to share with us her top property search tips.
As part of your due diligence (research), Natalie recommends that you look for an investment property with the following attributes. By doing so, you can ensure your property increases in value and provides long-term financial stability.
It’s recommended that your property is:
· within walking distance or close proximity to public transport, a café, a shopping centre and a school
· clean, tidy and well cared for, and looks to require less ongoing maintenance
· in a street with other well-maintained properties (think of the adage ‘the worst house in the best street’)
· in an area experiencing redevelopment/ regeneration
· in a suburb where rental properties are in high demand, but there’s low supply
· able to be easily spruced-up (e.g. by painting, gardening etc) to add instant value
· able to generate a healthy return (rental income + capital growth), over the long-term.
Natalie’s top tips to research before buying.
1. Purchasing real estate in an unfamiliar area – If you don’t know much about the suburb, it’s important to seek advice from a property manager. They can assist you to better understand the demand and expected rental return, as well as the type and quality of tenants interested in your property. Know what you’re buying into.
2. Building and pest inspections – It’s an additional cost but building and pest inspections are worth their weight in gold. They provide peace-of-mind and an ability to gauge (and plan for) future maintenance costs.
3. Strata or Community Titled real estate – If you’re interested in Strata or Community Titled properties, request a copy of previous AGM minutes and associated property financial documents. Not only will the minutes provide insight regarding maintenance or issues on your property, but it will delineate the financial outgoings of the group, giving you a better understanding of additional sinking fund costs and ongoing financial outlays.
Ready to take the next step in your investment property journey? If so, the key takeaway is to seek expert advice along the way. An investment property could be one of the biggest financial purchases you make – so don’t rush it. Make sure you understand what you’re getting yourself into, and the impact of your decision on your financial situation.
Do you know what you’re trying to achieve with purchasing an investment property? It’s amazing how many people are eager to purchase real estate without being clear on this simple question.
But this is only the tip of the question iceberg. Once you’re clear on your financial goals, other key questions to consider are:
· What’s the return you’re after, and can you achieve this return via another financial strategy?
· Do you want to gear (borrow money to fund) your investment positively or negatively (positive and negative refer to the tax position)?
· What type of property are you thinking of purchasing (old or new, house or unit etc)?
· Are you going to save for a deposit and how much? How much will the bank lend you?
· Have you done a cash flow analysis and what is the predicted monthly cost of the property (e.g. council rates, insurances, manager fees, maintenance etc)? A mortgage broker can assist you with working these out so we highly recommend using one – and here’s a link to one we use.
· Should you self-manage or use an expert property manager?
Concerningly, people often view an investment property as a financial silver bullet; an asset that will set you up financially and solve your money woes. But this is not always the case, and often, it can be the exact opposite.
If you don’t know where to start, it’s wise to chat with a professional.
They can answer all your questions as well as provide further guidance on the benefits and pitfalls of an investment property as a financial strategy.
Want to speak to a property professional? Why not reach out to Natalie
Guest contributor: Natalie Abbott. Natalie is the Principal/Senior Property Manager at Property Management Adelaide. As an award-winning, fully licensed property manager, Natalie has a passion for helping people to make the best possible property purchase, whilst providing an outstanding customer service experience along the way. To learn more about how Natalie can help you on your investment property journey, contact her today for a free no-obligation chat.
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