Buying an investment property
by Wealth Know How in Property
Property is a location game: where and what you buy could affect your return on investment. When you're considering where to buy, you should ensure that you stick to property markets that you’re familiar with. Try to look for areas where high growth is expected, and areas where rental income is high compared to the property value.
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 25 Mar 15
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Property is a location game: where and what you buy could affect your return on investment. When you're considering where to buy, you should ensure that you stick to property markets that you’re familiar with. Try to look for areas where high growth is expected, and areas where rental income is high compared to the property value.
Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
This means that you’ve got to do your research. Because properties don’t sell very often, it is an imperfectly informed market, but that’s exactly where you may get an edge. Get to know the prices being paid, how hard is it to rent in that area, and what rent to expect. Get to know the proposed changes/developments in the area that may affect future prices. Knowing your backyard well, knowing what drives sellers, gives you the inside running. An interstate investor, or an investor who is relying on the estate agents, may not understand these things.
When it comes to what to buy, look for properties with features that may appeal to as many people as possible, such as a second bathroom, lock up garage or somewhere close to shops, schools and transport. Look for a property that may attract more than one segment of the rental market such as singles, couples, young families or retirees.
Low maintenance costs are important. Units can be easier to maintain than houses, although you may have to pay body corporate fees
When deciding if a property investment is right for you, remember that property prices can go up and down. Once you have a property in mind, think about the income you expect to receive from it and what your regular expenses will be. If there is a shortfall, think about whether you can cover it long-term. Also consider whether you could cover all expenses short-term if you had no tenants for a while.
You can definitely improve both your rental income and eventual capital gain with a good renovation. But the flipside of that is that you should only renovate your property if you think it will increase the amount of rent you can get, or if it will make the house or unit easier to rent. Remember, property improvements are not tax deductible.