Property investment is one of the safest and most popular forms of wealth creation. The initial and ongoing outlay can be costly, but investing in the right areas with robust rental yields can provide a rewarding passive income. Education is key to successful property investing. Here are some quick tips for identifying your first property.
What is your ‘why’
Before jumping online to search for your first investment property, why would you like to diversify your wealth portfolio into this type of asset? Moreso, consider whether this is the right path for you. Property investment involves adopting a different mindset than buying your own home. It’s all about being strategic in your approach and removing any emotional connection.
What is your game plan? Will it be a short-term investment with an excellent rental return, something to kick-start your wealth creation focus in the medium term, or do you have a longer-term goal for retirement? All of these factors will come into play. They may impact every decision moving forward, such as the suburbs you look to invest in, the type of property you are after and whether you will own the property long enough to gain a good return on investment.
What is your budget
Similar to purchasing your own home, there are many things to consider to ensure that you have sufficient day-to-day cash flow and ways to finance the expenses of an investment property. Financial lenders may assess the current equity in your home when calculating how much you can borrow for your investment property.
They will also weigh up any risk factors related to your payment history and future expenses that may be required for the investment property, including council rates, strata levies, capital works, urgent renovations and ongoing maintenance.
Lenders will also consider the current and forecast capital growth of the area you are looking to buy in and will use this to help predict potential rental income from the property. This will determine if the rent will cover your expenses or if a portion of your income will be needed to subsidise the mortgage repayments and other expenses.
Where to buy and what style of property
Once you have clarified why you are investing in property and what a comfortable budget looks like for your current situation, then you can consider the location.
Every area has its own lifestyle benefits depending on what your wealth creation goals are. Property in the suburbs closer to city centres, like Sydney CBD, will attract those looking for easier access to public transport, employment opportunities, social outlets, and entertainment venues. Renters in the outer suburbs are more likely to be families needing nearby schools, safe places to play, shopping centres and bigger backyards and, therefore, stand-alone houses versus an apartment.
It is important to work out if you want to invest in a house, townhouse, unit, or another property style as each brings varying obligations regarding regular maintenance and general upkeep.
If you choose to invest in apartments, strata levies and shared facilities need to be considered, such as a pool, lift access or landscaped gardens. These are factored into the strata levies and can increase your quarterly expenses, especially if capital works need to be carried out. Meanwhile, standalone houses incur expenses in other ways for the upkeep of things like fences, driveways, gardens and roofing.
No matter the type of property, they will all require regular maintenance and upkeep, and the age of the home will determine how urgent they need to be attended to. For peace of mind, we recommend you consistently set aside funds to cover unforeseen circumstances and future renovations. Kitchens and bathrooms tend to be the most costly rooms to install, maintain and update.
Need advice?
We can help with all those things that you may not already know. You don’t have to be an expert in investing, you just need to know who to call.
Jaime is a seasoned Senior Property Manager and Director with over two decades of expertise. She excels in negotiation, delivering impressive outcomes for her clients. Her focus lies in Sydney’s East and Inner West, with a profound understanding of their distinct features, which she has acquired throughout her career.
She is a top-notch professional known for her proactive approach, attention to detail, and excellent communication and organizational skills. Her performance-driven mentality and efficient yet calm demeanor result in exceptional service for both landlords and tenants.
Book your one-on-one, obligation-free, consultation with Jaime now. Call her on 0488 600 168 or email jaime@vogueproperty.com.au.