How to invest in the real estate market.
No one can predict with any certainty how the real estate market will trend. However, there are lessons to learn from those who have been property investors for many years. If you follow certain principles you can increase your wealth over time whilst owning an asset.
With every positive upturn in property, there is an inevitable downturn. But if you hold your property over a long period of time you should see your equity grow. So, how do you minimise the risk prior to making a real estate purchase? There are multiple property forums and advisors out there. Take your time and talk to as many people as possible who are experienced in property investment. There are many people out there who are happy to advise you on the best path. And they will do this freely.
We have created a few tips on the basic principles of property investment.
1. Think like a tenant and make a list of requirements
- Generous sized bedrooms with ample wardrobe space.
- Parking space
- Separate laundry facilities
- A living area that is comfortable
- What are the neighbours like?
2. Property access that is close to amenities
In an ideal world, your property is at the end of a court and only two blocks from a school, shopping centre, public transport and healthcare facilities. These are factors that will help your property grow in value. Also, properties in these locations tend to hold their value if there is a negative correction in the market.
3. Do your homework
As they say, buy the worst house in the best street. Look for the median price of properties in your desired suburb. See what the average annual capital growth and the 12-month capital growth is in that suburb. You can also find what the gross rental yield is for most suburbs via certain websites.
4. Increase the value quickly
If you have done your homework and have been patient in purchasing your home that is below the median price of other properties in your neighbourhood then you can quickly increase the value. Minor fixes can include some new paint, carpet and gardening. Do the blinds need replacing? Is the kitchen a little tired? There are multiple minor renovations that you can do to increase the value for a minimal cost. Factor in these costs before you purchase the property.
5. Refinance your investment property
Has your property increased in value over time? As a safeguard, you can refinance your property as a warranty against you losing your job. This is insurance that should enable you to keep up with your mortgage repayments.
6. Keep your tenants happy
Property management is a skill. Engage the services of a registered property manager and let them deal with the rent collection and any maintenance issues. Having tenants that pay their rent and maintain your property is gold. Make sure you have 12-month rental contracts that are bound by Government, State and local laws. A property manager should also furnish you with ready to submit tax accounting documents. You have gone to all the trouble in finding your property now let a professional manage it for you.