The surefire way to see growth in value is to buy a property in an area that’s rising in value or predicted to do so in the future. Areas with existing good amenities, jobs and infrastructure are often the ticket and those with further amenities and infrastructure planned are usually even better still.
But you also want to make sure you buy into in an area with strong rental demand, low vacancy rates and high rental yields. That way you can make sure your property is more likely to be tenanted so that you make a better income from it.
It really pays to do your homework before you buy. The good news is that you can easily check the data and find out what an area is like at realestate.com.au/invest and also realestate.com.au/neighbourhoods.
The first rule of property investing is to buy with your head, not your heart. So think business. Who is your target market and what appeals to them? When you’ve worked this out you should apply it to every decision you make for the property.
For instance, if your property is close to a busy city CBD with professional appeal or in a regional area with fly-in-fly-out workers, would you be better off with a fully furnished property rather than an empty one? If it’s in a holiday area would you be better looking for a regular long-term lease, or doing short-term holiday lets? In an area popular with students would you be better off renting it out by the room?
A proven way to maintain your investment property’s value is to select a tenant who will treat the property as if it’s their own. That way you won’t just be more likely to receive your rent in full and on time, you’ll also most likely be up for fewer maintenance costs.
Spending a bit of money upfront on quality advertising and marketing, and putting time into reference checks to select the best tenant for your property almost always pays off in the long run.
One of the biggest issues – or complaints – tenants have about their rental properties is poor maintenance. And keeping a property well-maintained is crucial to maintaining and adding to its overall value.
The best way to do this is to promptly address any repairs or by employing a property manager to do this for you. Little things can quickly grow into big problems if they’re not addressed early.
You or your property manager should also conduct regular inspections to make sure the property is in good condition and proactively look for ways to improve its appeal to tenants.
Rental properties can quickly get tired and old, which can turn tenants off, making them harder to lease without reducing the rent.
But keeping your investment fresh and modern doesn’t always mean you need to embark upon a full-scale renovation project. Quick and inexpensive ways to make a dramatic difference include:
If you are going to spend money on a renovation or bigger ticket items, make sure you spend money where it adds money and makes a real difference to the rent you can command.
Features that are popular with tenants – and they’ll pay more for – tend also to be the same features that are popular with buyers, including:
If your investment property is a unit, don’t ignore your strata scheme. Getting bigger picture improvements made to the whole building can also increase the value of your property. For example, tenants will often pay more for a security building, or one with lovely communal gardens they can use.
Capital growth may happen overnight, and the value of your investment property could shoot up in value straight away. Similarly, rents in your area may rise within the first 12 months of buying, meaning you have every reason to ask for more at the first rent review.
But the reality is that property investing is usually a long-term proposition. It may take some time to see the market ebb and flow and for your investment to pay off.