Record low interest rates have given seasoned investors a further incentive to put their cash into property, but for first-timers, making the foray into property investment can be a bit daunting.
The following seven steps are essential reading for anyone considering investing in property for the first time - and whilst they're not exhaustive, they do provide a basic structure and process for getting started on a property portfolio.
1. Establish your financial position
The first thing you should do before you even start looking at potential investment properties is to know your budget, understand your cash flow and enquire about pre-approval of an investment loan from your lending institution. In addition to the costs of purchasing a property (which include things like stamp duty, conveyancing fees and council reports) it's also important to budget for any future expenditure related to the property, such as upgrades or maintenance, land taxes, insurance and so on.
2. Research the market thoroughly
It's risky to invest in a property based on hearsay or gut feel. Doing extensive research and getting accurate and reliable information from recognised sources, such as from property management companies, government agencies and official real estate data will be a huge help in determining the most appropriate area to invest in, as well as the most suitable type of property to buy (e.g. apartment, duplex, house etc).
3. Define your investment goals
Ask yourself what you want to achieve from your property investment? Is it long-term financial security or is it regular rental income? Whatever your goal, it's important to remain realistic.
4. Choose your area
Where and what you buy will have a significant impact on the return on your investment. If you've done your research thoroughly, you'll be able to make an educated assessment and hopefully choose a location with high growth potential and low vacancy rates. Ideally, you should invest in an area you are familiar with and which appeals to more than one segment of the market (i.e. areas which could appeal to families as well as retirees etc).
5. Keep emotion out
When you finally get down to the nitty gritty of actually looking at properties, it's important not to get carried away by emotion. A house with sensational furniture or one that has a beautiful garden or a stunning view may not actually be the most practical or appropriate from a rental perspective - and it's imperative to make rational decisions based on your end goal.
6. Choosing a property
You should only consider properties that you are certain will have strong tenancy demand and which has features that will appeal to as many people as possible. Features such as extra bathrooms, lock-up garages, good security and close proximity to public transport, shops and schools are all important considerations when choosing a property - plus you need to make sure that it has good resale potential for the future.
7. Decide on how the property will be managed
Once your offer has been accepted, you will need to decide whether you'll be managing the property yourself or whether you'll be appointing a property management company. If you go it alone, then you will have to do everything related to the property (from finding a tenant, collecting rent, chasing any arrears, organising maintenance and repairs to dealing with complaints from neighbours and complying with legislative requirements).
However, if you decide that it would be easier to hand over responsibility for the day-to-day management of the property, then your next job will be to choose a property management company. There are many different property management firms in Perth, and you should do your homework thoroughly to ensure that you make the right choice.
Using professionalism, experience, reputation, integrity, attention to detail, tenant selection and communication excellence as their key selection criteria, many investors have chosen Time Conti Sheffield to handle their Perth property management needs. If you're considering venturing into the property market for the first time, why not contact them on 08 9362 5333 to put their 60 years' of experience in real estate and property management to the test and see why they're the first choice when it comes to property management in Perth and West Australia.