Finding the right property for investment
WHEN YOU HAVE DECIDED IT’S THE RIGHT TIME TO CONSIDER INVESTING IN PROPERTY, THERE ARE A NUMBER OF THINGS YOU NEED TO KNOW.
There are 1.7 million Australians who own investment properties, however less than two per cent of these (that’s less than 37,000) own five or more properties. That’s because they don’t always choose the right property or know how to manage them as their portfolio grows.
There are some key factors involved in choosing the right property for investing and these include undertaking the right research and market analysis and following best practices when it comes to property acquisition.
Choosing the right property
When it comes to choosing the right property, you will need to ask yourself;
- Have you done extensive research on locations and developers?
- Are you sourcing the properties at the right time and in the right location?
- Have you chosen the right properties to maximise growth and yield?
Property research is like a jigsaw puzzle, you only have to be missing one piece and the puzzle is incomplete. If you really want to ensure you make the best decision you will need to look at:
- Population movements
- Employment and economic growth
- Demographic changes
- Infrastructure spending
- Rent and yield variations
- Supply and demand
- The development design
- The property value
If you want to find properties in areas with high rental yields and future demand to ensure you get the highest possible rental returns, you will need to be able to analyse relevant data from all of these sources to locate the next hot spots and stay ahead of the market. This means you can then secure an investment property in the right location at the right time to maximise future capital growth and high returns.
And don’t forget to check to see if your potential investment property will suit the specific demand of renters in the area, making your investment stand out from others on the market.
Now that’s a lot to consider for the average person. And that’s why often it is best to go to someone who already has experience in property investments to point you in the right direction or even do all of this hard work for you.
Managing your property acquisition
Let’s say you have done all of this work and you have chosen a property. How do you then go about the specifics of the property acquisition? You need to know how to:
- Negotiate with developers to get the very best price
- Check that the planned finish and fittings for your investment are relevant to your needs
- Assure that colour selection and fit out is suitable for your property
- Know the approval steps for the progress draws for payment
- Keep the developer on track with the build
- Ensure a fixed price construction contract that can only be varied with your authorisation
- Keep up to date with everything you need to know through the whole process
Now that you have an investment property, you need to decide how you are going to manage it. The best way is to appoint a property manager. The property manager should be able to give you advice on property law, your rights and responsibilities as a landlord – as well as those of the tenant. The property manager will also help you find the right tenant, conduct reference checks and make sure they pay their rent on time. They’ll also take care of any maintenance issues.
After reading this, you will probably start to realise why so few property investors in Australia are able to grow their portfolio to five or more properties. Property investing may seem like a great idea, however like any wealth creation investments including shares, funds management or others, it’s always best to ensure you have expert advice to help you achieve your goals.