10 Top Tips for Buying an Investment Property
February 11, 2020 at 11:30 AM
1.Set up your network of support before you buy
Your team should consist of individuals who you can trust and will go the extra mile for you. We recommend your network include Mortgage broker, Property Manager and their tradies, Accountant, Valuation company. Before you engage in their services, understand how they operate and their general fees.
2. Crunch your numbers
When you know your income and you know your rental expenses, you can determine if this property is suited to you, some investors focus on cash flow while others focus on capital gain, it is good to discuss your needs with your Mortgage broker and Property Manager clearly and openly from the start to achieve your goals.
3. Location, Location, Location
Town: Determine the distance from your current place of living, if you want to be a hands-on landlord, properties closer to home is ideal.
Area: Look for an attractive school zone, a neighbourhood with low crime rates, an area with a growing job market and plenty of amenities, such as parks, malls, restaurants and movie theatres.
House: Avoid houses down long narrow driveways, next to railway tracks or under power lines. Also consider the surrounding houses and the distance between your house and the neighbouring property for privacy.
If you are looking to appeal to a family look for a fully fenced yard or a courtyard for children to play in. Fully fenced properties attract good tenants prepared to pay premium rent.
We all want to feel safe and secure; and this is no different with tenants. Secure tenants equal long term tenants. Consider ways to upgrade the security. Window security stays are an affordable option and it helps with ventilation. Burglar alarm systems are another great way to enhance the property. However, be careful with cameras, tenants may see this as an invasion of privacy or have concerns that the area is unsafe.
6. Layout and Size of the property
Look at the layout of the property, the size of rooms and general flow of the house. What can you do to add value? Building a large deck and adding an outdoor covering for a year-round entertainment area, install an indoor wash line in the garage, install panel heaters or ceiling fans in bedrooms These are a few cost-effective Ideas that tenants see value in. We have found that houses with features like these have less vacant time and potentially achieve higher rents.
7. Drug Test
Get the property tested for Methamphetamine as part of due diligence, many insurance companies now require testing between tenancies, or they reward testing with lower excesses and greater benefit levels.
8. Use Experts
Stick to what you are good at and delegate the rest. Whether it is property maintenance, handling conflict or doing your own year-end financials. It may take more effort to begin with to set up, but in the long term, it will save you time and allow you to focus on the bigger, more important tasks. It may even get you to your next investment property faster.
9. Right Property at Right Price
Choosing the right property at the right price. Assess the level of maintenance to be done on an annual basis. Some properties require the exterior of the property to be painted every 5-10 years. Would you need to do a lot of landscaping on an annual basis? Or is it an easy-care flat section. With a newly built property, there are no foreseeable maintenance and all appliances may be under warranty.
10. Rental Appraisal
Obtain a free rental appraisal and know your market. Your mortgage broker will thank you if you come prepared with a rental appraisal. Every bank needs them for lending. Do not hesitate to tell your property manager what rent you had in mind. This could spark good conversations regarding their market knowledge and past trends in an area. We do recommend becoming an area expert.
But the best way to get the inside scoop on the area and the rent is to call a property manager. We have access to database of bad tenants, area statistics, property sales statistics. All this information can give a very clear picture for you to work with.
Tags: Landlord Advice
Category: Landlord Advice