5 common Inner West property investment mistakes
Are you a first-time property investor looking to get on the real estate ladder in Inner West Sydney? Have you recently upsized but wish to retain your current property as a rental. Before you do anything further, check out these common property investment mistakes so you put your best foot forward.
1. Not doing your research
Like anything in life, you need to do your homework before you invest in an Inner West property.
- Focus on the suburbs you’re interested in and find out the current demand for rentals and the average demographic. This will help you understand who your prospective tenant might be, so you can invest in a property that meets their needs.
- Weigh up the pros and cons of an old versus new property. While a new property equals less maintenance, it can include hidden commissions and fees. Alternatively, old properties may involve more upkeep, but you can easily increase the value through cosmetic renovations. The lower price may also be attractive to many first-time property investors and can result in substantial capital gains if you buy in one of Australia’s growth suburbs.
While doing your research, it’s best to talk to a local real estate agent and a local property manager. They’re experts on the current market, so they can advise you on where and what to buy based on your goals and finances.
2. Not having a property investment strategy
One of the most important property investment principles is establishing a long-term strategy, which can include:
- Buying and holding property: A common low-risk and long-term strategy.
- Negative gearing: While they run at a net loss, approximately 60% of Australian properties fall into this category due to the tax benefits. This strategy is most appropriate for high-income earners who can cover the losses.
- Positive cash flow: This is where your rental return covers all expenses and includes a monthly surplus.
- Buying brand-new or off-the-plan.
- Renovating and holding or flipping a property: Renovations can be costly, but the increase in value is worth it for some Australian property investors.
3. Not getting your finances in order
One of our top tips for property investors is to get your finances in order before you start researching and developing your investment strategy. Buying and managing an investment property can be costly, especially once you factor in costs like stamp duty, conveyancing, and legal fees, property management, and mortgage repayments.
Once you know your financial goals and have a budget in place, you also want to ensure you have sufficient surplus funds to live on and cover your mortgage repayments in case of an emergency. Aim for two to four months of rental income/repayments as a financial buffer.
4. Selling as soon as the market changes
Property is always a good investment, as long as it’s a long-term one. Like a fine wine, real estate needs time to appreciate in value and to subsequently increase your capital gains. So don’t buy and invest in the property for the short term.
This also relates to selling your property prematurely. While you may think the price is too good to pass up or you’re fearful of losing money, remember a long-term property investment strategy usually delivers more value.
5. Trying to DIY your property management
You may think it will save you money not to invest in a property manager, but managing a rental property effectively takes time. Hand over the reins to a property manager you trust, who knows everything there is to know about landlord legislation, tenant rights, compliance issues, and inspections. The peace of mind of knowing your rental property is in safe hands is priceless.
Let the property management experts here at Vogue Property manage your Inner West investment property with the care it deserves.
Can we help you add value to your investment property?
Updating the interior of your investment property adds value and makes the home more attractive to prospective tenants. It also ensures that you can get the best possible rental returns for your investment. At Vogue Property, we can help you to decide what will make the most impact because we understand exactly what tenants are looking for.
Free Property Management Advice, talk to an expert now!
Are you a landlord looking for advice? Do you have questions about these uncertain times? Changes to the rental market or anything specific to Property Management? Book a one-on-one, obligation-free, consultation with Jaime Pratt, Head of Property Management at Vogue Property Managers.
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With over 20 years of property management experience, Jaime will openly provide advice on improving rental return, enhancing your property, attracting quality tenants, and finding ways to alleviate your expenses.