Investment Buying
There have been a lot of stories and reports about lack of rental properties and rents increasing which should see a return to the market of property investors.There are many factors contributing to this and should you be considering an investment property here are just a few things to consider.
Location - seems obvious but it ties into all the other points raised. If you get the location wrong you won't get the capital growth or rental returns. When considering a suitable location look at the infrastructure around it presently and what is planned to happen. Are there new shops opening in the area, is it walking distance to transport and shops, are there parks nearby?
Type of property - consider the demographics of the area and what renters are looking for. Would it be better to buy a 2 bedroom unit rather than a 2 bedroom house because it is in an area where predominately professional couples rent and they don't want a yard?
Depreciation allowances - how old is the property and when were any renovations carried out? Have a depreciation schedule prepared and claim a tax benefit.
Capital growth - how has the area performed over the past few years? Is it in demand by people renting and buying? Capital growth is one of the main reasons people buy investment properties so you want to buy in an area that will increase.
Maintenance - is the property in good condition or will it require regular maintenance and costly repairs? This can soon eat into your rental income or add to vacancy periods.
Rental return - this isn't just the dollars per week. You have to consider if the property becomes vacant how long will the vacancy period be? If you have it vacant for an extra 2 weeks because you want to try and get a higher rent you could be worse off. For example if the property was $250 per week and you tried to get $255 but that wasn't market price and it is vacant for an extra 2 weeks you have lost $500 in income. It would take nearly 2 years to recover that money if you were able to find someone to pay the higher rental or if you then have to drop your rent to $250 you have lost that $500 forever.
It may sound daunting but Robinson Property can assist you along the way. Just call in or make an appointment for all of your real estate needs, we are happy to help.