It seems that everyone these days is looking to get into investment properties because it is the thing to do. We seem to see it often where people purchase an investment property without factoring all the attributes of property investment and are then forced to sell as the costs were a lot higher than they thought. Below are some tips for first-time investors to help ensure that you have the best start to your investing career.
Before looking for an investment property, it would be advisable to engage a mortgage broker who will always act in your best interests. I would recommend requesting a pre-approval from the broker to ensure that you are only looking for investment properties in the price range that you can afford.
There seems to a misunderstanding that investment properties just tick over and there are no ongoing costs. Unfortunately, investment properties are just the same as your own home – there is always something that needs doing! The regular costs involved are rates, insurance, fixed water charges, repairs and maintenance, lawns, gardens and property management fees should you choose to have your property professionally managed. When you are doing your budget please ensure that you include the above in your figures otherwise you may find that you are out of pocket.
It is advisable to ensure that you do your homework on the suburb that you are looking to invest in. I would drive through the suburbs at various times to ensure it is well kept, and the neighbourhood looks like it is a safe neighbourhood. I would also recommend talking to someone like myself who knows the areas well and will give you the honest truth! Better to be well informed on everything then learn the hard way.
Whangarei is a great area to invest in as there are plenty of tenants looking to rent, the population is growing, there will be more jobs created with the proposed Container Port that is set to be moved to Whangarei.
If you are in a booming market it may be easier to renovate and sell the property to create a quick property. In a slower market, it may take many years to create the same profit level. Ensure that you are aware of which market you are purchasing in.
It is important to remember that whilst the house with the nice interiors do look lovely, a rental property just needs to be clean, tidy, functional and most importantly easy care!
Remember that you are probably not going to be living at this property. It is easy to get caught up in the emotions of loving a home - that is something you leave for your own home! It is important to way up the pros and cons of each property to ensure and ensure that you are looking at every aspect of the property.
If your repayments on the investment loan will not be fully covered by the rent, your property will be negatively geared. While this can have tax advantages, it can also lead to financial stress if you don’t have enough cash flow to cover the loan repayments, rates or body corporate fees, so consider your budget carefully before buying.
It is not necessary to have your own home paid off before you look at investing in property However you must be comfortable with debt levels. Ideally, you would have a large chunk of your own home paid off and all consumer debt under control to ensure that the financial burden is not too great.
Do your homework thoroughly. When putting in an offer on a property always make it subject to Lim report, builders report, due diligence, meth and finance. That way if any problems are uncovered you have plenty of options for outs on the contract before going unconditional!
If you are considering purchasing an investment property in the Whangarei area please do not hesitate to get in touch with me. I have brought and sold properties and have learnt many things along the way. As I own my own investment property I understand things from both a landlord and professional property manager’s point of view. Look forward to chatting to you.