Are you thinking about becoming a property investor? It's incredibly important to approach buying an investment property in a different way than buying a home. Here are 3 important considerations for anyone looking to invest in property.
1. Who is going to live in the property?
When looking at a home to buy, it’s all about your emotions. Does it measure up to your needs and desires? Do you like the kitchen tiles? Is there a nice deep bath for you to unwind in? When looking for an investment property (whether it is Sydney real estate, Brisbane real estate, or Nationwide), you need to take the emotion out of the equation. Assess the pros and cons of the property based on the needs of the potential tenant first. What does the suburb offer in terms of amenities and transport options? What are the local demographics? What are the nearby employment opportunities? Is the property ideal for families or flatmates?
At Calla Property we do this research for you. We look very carefully at where geographical regions (for example Sydney real estate) are on the Property Cycle, we look at what is driving growth and which regions are experiencing strong capital growth. We then analyse suburb profiles within those regions and what their property vacancies are.
2. What rent can you expect to achieve?
Are there other similar property types in the area? What are the median rental yields in the area? What is the local rental demand like? It is important to have a sound understanding of the potential rental income to know whether the numbers will stack up in your budget. When it comes down to it, buying an investment property is a number equation.
At Calla Property we favour Off-The-Plan properties as a high-yield investment strategy, and this is one of the contributing factors. Not only are the properties part of a group, meaning there are generally comparable rental figures, they generally have on-site property managers that assist with optimising occupancy and quite often have waiting lists!
3. What are the costs related to this property?
As the property owner, you will be responsible for the maintenance and upgrading when repairs are needed (even if you are living in Sydney and the property is elsewhere). What are the foreseeable holding costs? Is there a garden that requires upkeep? Are there future structural changes needed?
As an investment, you want your holding costs, that is how much it costs you to keep the property, to be as predictable as possible. With a second-hand property, you can’t know when you will need structural work. With off the plan, you will have a 7-year builders’ insurance plus the time it takes to build the property, so at least 9 years before you have to think about any extra costs.
So, in the long term, an Off-the-Plan property will cost you less, and in the short term, you’re able to fix today’s price with a 10% deposit but you don’t need to make payments until settlement. During this time – usually 12-18 months you should have experienced capital growth.
At Calla Property, we work with our referral partners to form wealth creation teams for our clients to grow their wealth through property investment. Together we minimise their risk by ensuring they have the right strategy and structures in place and maximise their opportunity by researching the property market set for growth and ensuring they’re using the best vehicles for investment.