If you're considering entering the investment property market for the first time, there are some key questions that you should ask before signing an offer document.
As you know, property is a long-term investment and the value of knowledge cannot be overestimated when making such a significant commitment.
How am I going to manage this property?
If you are not going to live in the home but rather intend renting it out, what do you know about your role as a landlord? Will you be taking on all the responsibilities of finding tenants, arranging contracts, sorting out maintenance issues etc or are you going to appoint a property management company?
Why have I chosen this particular home?
'Location, location, location' is the real estate mantra for a very good reason and you should identify the area you want to invest in before you start looking for a property. For example, if you're looking at property in Perth, you should draw up a list of your preferred suburbs first and then see what's available in those areas. Be clear on what type of rental property you want to buy. What is your target market? Is it families, young professionals, students sharing a home etc?
Don't hesitate to discuss your views with your local estate agent or property management company and ask them the tough questions. What development plans are there for the area? What are the schools, medical services, shopping, entertainment, transport and community facilities like? What are the neighbourhood demographics? How has property in the area performed over the past 5 - 10 years? What is the area's rental history? A professional real estate agent or property management company in Perth will be able to answer those and many other questions for you.
Are you making an emotional decision about the house or have you rationally and objectively considered all aspects of your intended purchase?
How long do I plan to hold the property?
As mentioned earlier, property is an investment for the long haul and buyers should generally be looking to hold onto it for at least five years or more.
Have I considered all the hidden costs associated with buying an investment property?
Property ownership isn't just about paying the mortgage amount every month. There are other costs that need to be taken into consideration before committing to the purchase - and you need to be aware of these so that you aren't landed with unmanageable payments at month-end. Insurance, property taxes, estate agency fees, fees for the property management company, maintenance, government rates and levies and even household utility bills during vacant periods should all be factored into the equation and it is worth doing a thorough cash-flow analysis before you even start looking for an investment property.
There are many other factors to consider before buying an investment property, such as the condition of the home (i.e. will you need to spend money on upgrading it before you can put tenants in), the condition of any appliances, heating and cooling systems, geysers etc, the state of the carpets, the bathrooms and the kitchen etc. Having an open and thorough discussion with a property management company can be extremely valuable, as you will get a perspective on what's required in terms of upgrades as well as on your rental prospects before making any major financial commitment.
If you're considering purchasing an investment property and want to discuss the ins and outs of the Perth rental market, then Time Conti Sheffield is the name to remember. Give them a call anytime 24/7 on 08 9362 5333 or visit their website for a comprehensive overview of the rental market and every aspect of advanced property management in Perth.