Your finances are in top shape and you’re thinking of buying an investment property. But like all big commitments, there’s a lot to think about before taking the plunge. To help you out, we’ve put together this handy guide of top considerations.
Research the market
You can never do enough research when it comes to property investment. Remember this is a financial decision rather than an emotional one, so think about the property from a renter’s point of view rather than your own likes and dislikes. Typically, you want a low maintenance property, with high rental returns and the potential for capital growth over time. Look at the types of properties in demand in certain areas, talk to agents to understand what renters may be looking for in a property, and think about what’s driving local demand, e.g. a university or hospital close by.
Understand the costs
Investing in property comes with its fair share of costs, so don’t get caught off guard. There are one-off costs associated with purchase like transfer duty, sometimes known as stamp duty, building inspections, conveyancing, and lending fees. But it’s also important to do the numbers on the likely ongoing costs of ownership. These usually include loan repayments, rental management, repairs and maintenance, council rates, utilities and insurance
, and body corporate fees. Plus, don’t forget to factor in the periods with no tenants or rental income.
Ensure you’re covered
When renting out your property, you’d like to think most tenants are decent folk. However, there’s always the risk that something will happen, potentially leaving you out of pocket. So, just like your own home, it’s important to take out adequate home insurance to protect the building itself, plus landlord insurance to cover against eventualities such as theft, damages and rent defaults.
Buying property is a massive investment so before jumping in, make sure you invest the time in researching the best options for you.