There are lots of reasons to invest in property. It can be less volatile than shares or other investments; it is possible to earn rental income while benefiting from capital growth; and you are investing in something tangible rather than paper shares.
There are many things you should look at when investing in property. We’ve put together a list of 6 tips for you to consider when deciding whether property investment is right for you:
1. Make sure you do your research so you are choosing the right property at a good price – It is often wiser to invest in property markets you are familiar with. That way, it is easier to do your research on things like recent sale prices so you have an idea of what you can expect to pay for property in the same area.
2. Work out how much you can afford to pay – think about the income you expect to receive from the property you want to purchase. Then work out what the regular expenses will be for that property. Is there a shortfall? If so, work out whether you you can cover it long-term. Also work out what the expenses would be for a short-term cost such as if you had no tenants for a while.
3. Find a good property manager – Whether you decide to manage the property yourself or get help from a property manager, do your research, ask for references and let them know in writing what you require in the management of the property. For example, how many times a year you want them to carry out inspections, and so on.
4. Make the property attractive to renters – If you buy a property that needs work, make sure you carry these out prior to renting it out as any improvements will add value and possibly allow you to ask for more rent.
5. Pick a mortgage that is right for you – whether you talk to a mortgage broker or directly to your bank, make sure you know what you need in a loan and do your homework so you can bargain to get the best product for your circumstances.
6. Check the age and condition of the property and facilities – Getting a building inspection is always a good idea. That way you know what the condition of the property is and what areas could potentially need work in the short-term and long-term.