Here are 5 considerations you should make prior to purchasing your first investment property:
1). The thought of owning an investment property or two appeals to many investors because it seems like an easy way to generate a steady supplementary passive income. However, the downside of owning investment properties can far outweigh any advantages if everything goes wrong. This is why you need to select an experienced agent that acts in your best interests at all times. Your agent needs to have the ability to deal with people; have good communication (with a good sense of humour) whilst still being able to maintain their professionalism.
2). Determine how much you want to invest in a rental. It’s best for new investors to start slow and only invest what you can afford to lose until you’ve proven you’re proficient at investing in the rental market.
3). Locate a property. With a budget in mind, it’s best to seek the advice of a real estate agent with experience in marketing these types of properties. They tend to know the market for rentals in your area and have access to the tools necessary to make accurate comparisons between homes for sale.
4). Assess the property. A thorough evaluation of a property should be performed before any decision to purchase is made. The services of a building and pest inspector can be valuable and should be utilised. Major defects can be identified and accounted for before the property goes unconditional.
5). Evaluate the rental market. Research into the potential of profiting from rentals in the area. Speak to an experienced rental agent that can provide you information on the vacancy rates and the median rent for the suburb that you are investigating. Your agent should also be able to provide advice on the supply and demand of housing in the area, taking into consideration the presence of schools, daycare centres and major employers. Before making any decision about starting to invest in rental properties, use due diligence to identify the potential risks and benefits of investing.
This article is for general informational purposes only and must not be taken as legal, financial or any other professional advice. We recommend obtaining advice specific to your situation before making decisions relating to your investment property and financial position.