Did you know at least 31% of the population lives in rented accommodation? 20% of these renters have no fixed lease and live on a month-to-month periodic lease. In addition, 48% of renters earn $35,000 or less per annum. What’s clear to see from this information is that investing in rental property can be a lucrative endeavor. If you can find a good property in a well-to-do area at a good price, you’ll be well on your way to making healthy returns. So, how do you go about buying your first rental property? Here are our top 5 tips.
1. Familiarise yourself with the real estate market
Your success as a real estate investor is tied strongly to how much of the market you know and understand. With that being said, education is key. Spend time educating yourself about the local real estate market. Asked why he has never invested in new tech companies, one of the richest men in the world Warren Buffet says that he is wary of making investments in companies whose business he does not understand.
2. Do your homework before making any offers
Armed with an understanding of how the housing market operates, you’ll be able to appreciate this tip. Do your homework first before making any offers. It’s no secret that where real estate investing is concerned, money is made during the actual sale itself. Those who take time house hunting, reading property valuations, and understanding the nuances of different properties will eventually find a property that’s worth purchasing. You will want a property that won’t require renovations before renters can move in so you can get cash flow immediately.
3. Get your financials in order before you sign
How much can you afford to obtain as a loan from your bank? If this is your first property, you want to take a mortgage that you’ll be comfortable repaying. In the event that perhaps you fail to get tenants straight away, you will be able to cover the loan repayments. This is something that if you follow our second tip you should be able to avoid. The best way to find out which financing option is best for you is to sit down with financial advisors and your bank. Understand the interest rates and how tax works. Make sure you understand everything before signing. You don’t want any surprises.
4. Know which are the best seasons to purchase property
Any real estate investor worth their weight will tell you that there are seasons to this. There are times in the year where properties sell better than others. If you’re selling your property, the best times to do so are spring and summertime. Winter, on the other hand, is an excellent time for buyers to go house hunting for several reasons: less competition from families looking for houses to move into, fewer people viewing homes so you can really evaluate properties, and more time to negotiate the price.
5. Hire a good property manager and leave them to do their job
Thankfully you don’t have to manage the property all by yourself. This is where property managers come in to help. Property managers are responsible for giving you sound property management advice and overseeing the running of your rental investment. They understand the Tenancy Act, your rights as a landlord, and those of your tenants. In addition, they’ll inspect the property on a regular basis and screen tenants to ensure that all is as it should be.
Do you want to discuss purchasing real estate in Sydney with someone? Get in touch with one of our friendly members of staff.
Disclaimer: Any information provided in this blog is not intended to replace legal, financial, or taxation advice given by qualified professionals.