Property investment can provide efficient cash flow and capital gain for investors, but it’s often hard to know where to start and what to look for in a property.
Blogger: Carolyn Parrella, Terri Scheer Insurance
For this reason, investors need to do their homework before taking the plunge.
A well thought out approach to property investment can help maximise rental returns and get a good price when the time comes to sell the property.
There are a number of things to consider in order to become a savvy property investor.
Clear investment strategy
First and foremost, property investors should have a clear investment plan. This should be in place even before starting the search in the real estate section of the newspaper.
Property can be an effective long-term investment if it has the potential to increase in value over time and produce regular income.
Whether you’re buying your first investment property, or your fifth, investors who set up a strategy that extends beyond the settlement date can create a positive experience throughout the life of their investment.
This holds true if you’re looking for an apartment, unit, townhouse, house or holiday house.
Consider including your capital growth and rental income strategy and how you plan to manage finances throughout the investment in the plan.
Know the market
Property investors should have a clear understanding of the market.
Go online and read up on market trends, investment reports and real estate data.
Seek professional advice from real estate agents and other independent advisers on selling conditions and market values in the area.
More experienced property investors may be able to shed some light on their own approach to investment.
Type of property
Consider the type of tenant you’d like to attract and choose a home that is likely to appeal to them.
For example, houses that are close to schools, public transport and other amenities will hold greater appeal to families and couples.
Inner city apartments are likely to appeal to students and young professionals.
The location of the property is also important and may increase the chances of attracting a quality tenant who will look after the property and potentially stay there for longer.
Consider a low-maintenance property as it will make life much easier for both tenant and landlord and minimise the effort and cost involved in the upkeep of the home.
Specialised landlord insurance
Too often many property investors overlook risk management until after a tenant has moved in or something has gone wrong.
Landlord insurance can help to protect investors from the specific risks associated with owning a rental property, including malicious damage by a tenant, theft, accidental damage, legal liability (as landlords) and loss of rental income.
Standard building and contents insurance policies usually don’t cover landlords for these risks.
About the Blogger
Carolyn Parrella is Executive Manager of Australia’s leading landlord insurance specialists, Terri Scheer Insurance. Terri Scheer provides insurance cover for landlords, helping to protect them against the risks associated with owning a rental property. These include malicious damage by tenants, accidental damage, landlord’s legal liability and loss of rental income.
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