Investing in property is a great way to increase your wealth through consistent rental income and capital growth.
Investing in Property
When Buying an investment property you first need to ascertain whether you can afford to buy and hold that investment property over a period of time as there are many investment risk. It is important you have the cash flow to support the costs associated with the property. It is imperative that you seek independent financial advice from a Financial Advisor or Accountant who have knowledge particular to this field of investment.
Where to buy your Investment Property
Once you have determined your financial ability to purchase a investment property, you then need to determine where to buy your property. Sydney properties close to the CBD or beach suburbs have historically shown to have continuous long term growth and high demand from tenants. However there are other suburbs outside this demographic which have shown great return and which are more in line with some investors budgetary requirements. It must be remembered that the overall goal of investing in property is strong long term growth, maintaining consistent rental return while staying within your individual budgetary requirements.
You need to look at historical data over the previous 5 - 20 years to determine the historical capital growth and rental returns, while taking into account future growth in the locations you are looking to invest.
Selecting your Investment Property
Selecting the investment property is the next stage in process and can be the most difficult. Different property types have their own benefits, for example houses generally show better capital growth but are more expensive and cost you more to hold with repairs and maintenance and general ware and tear. Apartments however offer a better initial return on investment in the rental income to cost ratio and have a larger pool of tenants to choose from. Both property types require Property Management services with houses requiring a more specialised service.
Ultimately it is capital growth and affordability combined with personal preference which determine the investment property you select. What is important is that you understand your options and have a property investment strategy to follow which will maximise your returns.
Using A Buyers Agent to source your Investment property
Using a Buyers Agent or Buyers Advocate to perform some or all of the steps in finding a top performing investment will ensure you receive the correct professional advice. Buyers Agents will develop a property investment strategy based on your property brief, research property and short list of properties and then evaluate, negotiate and secure the investment property for you. Blue Pacific Property can help find that special investment property through our Buyers Agent service.
Managing Your Investment Property
Organised and pro-active Property Management is paramount to the continuing success of your investment. Property Managers perform a range of services including finding and vetting tenants negotiating rents, completing all the legislative requirements under the Tenancy Act, routine inspections of the property, attending to maintenance issues, collecting rental income and making disbursements for costs and paying the remaining profit to the landlord along with financial statements in a timely matter, and completing the required inspections and financial accounts balancing at the end of the lease term.
The property investor can choose to perform these functions themselves but we do not advise this as there are many aspects of Property Management that the lessor may not be aware thus increasing the chance of non-compliance. This can result in both financial penalty and loss of rental income.