A beginners guide to property investing

A-beginners-guide-to-property-investing

Entering the world of property investment can feel daunting, especially if you don’t have a lot of investment experience in general.

Luckily, property is one of the safest types of investment, with capital growth over time almost a certainty.

In this guide, we explore the benefits of investing in property and also outline the process for getting started yourself.

Benefits

Financial security

It’s almost certain that your property will undergo capital growth over time, thereby increasing the value of your investment.

As well as capital growth, an investment property can also be used to generate regular rental income. If this is higher than the costs incurred in maintaining your investment property, collecting rent from tenants can become an effective ongoing source of revenue.

Safe investment

Compared to other avenues of investment, such as the stock market, property investment is generally considered the safest and least volatile.

There are a few reasons for this. First, you can immediately start generating returns on your investment through rental income. Second, the physical nature of a rental property makes it easier to effectively insure and also enables you to make specific changes to it to increase its value (e.g. renovations), allowing you more control over your returns.

Favourable tax implications

  • Though an investment property does incur taxes, including income tax, capital gain tax, property tax and land tax, you can claim back a number of expenses associated with maintaining the property, thereby reducing your taxable income, including:
  • Insurance
  • Property management and real estate agent fees
  • Repairs and maintenance
  • Depreciation on fixtures and fittings
  • Interest on your mortgage or investment loan
  • Council and water rates

At the same time, if your rental income is less than the yearly costs generated by your investment, your property is considered to be ‘negatively geared’. Generally, this entitles you to offset the difference (i.e. the loss) against your total income for the year – not just the income generated from your rental property. This means that any losses generated from your investment property result in a commensurate reduction in your overall taxable income.

That being said, it is important to remember that expenses still need to be paid by the owner, so the decision to intentionally negatively gear a property should be subject to careful consideration.

The process

Starting out

When exploring purchase options, it’s important to adopt the tenant’s perspective in assessing any given property’s value and potential. An impossibly cheap property on the edge of town will likely generate a worse return over time than a more expensive property in a desirable area with access to attractive amenities.

Below is a list of property features that tenants tend to find attractive:

  • Convenient location – easy access to schools, shopping centres, public transport and entertainment will be key for many prospective tenants
  • Quality fixtures and appliances – from hassle-free utilities to the inclusion of appropriate airconditioning units and fans, tenants value reliability and comfort
  • Suitable parking – many tenants will see access to (secure) parking as a non-negotiable, especially in locations where street parking may not be widely available (e.g. the CBD and other built-up areas)
  • Outdoor living amenities – because of WA’s temperate weather and a lifestyle that places a premium on the great outdoors, tenants tend to be attracted to rentals that allow them to enjoy the sunny weather and the sea breeze, whether that be via a balcony, alfresco area or a courtyard

For a more in-depth analysis of how you can make your rental property more enticing to quality tenants, read through our prior blog post here.

Researching prospective suburbs

Apart from assessing the attractiveness of a suburb from the perspective of prospective tenants, you should also consider its growth potential. Though ongoing rental income is important, ideally the overall value of your investment will also increase as time goes by, which in turn should enable you to generate higher levels of rental income.

The ‘Suburb and regional profiles’ section of REIWA’s insights page is a simple resource you can use to assess the performance of a suburb over time, from trends in sales and rental growth to changes in median sales and rental prices.

Estimating return on investment

Also known as rental yield, the return on investment of your rental property is measured by calculating rental income as a percentage of the property’s overall value – the higher the percentage, the better the return.

Rental yields are generally calculated on an annual basis and can be presented in gross or net terms, with the latter also accounting for the expenses associated with maintaining the investment.

Assessing the potential rental yield of a property pre-purchase will involve some guesswork, estimation and research. If it is already a rental property, you may be able to find out its current rental price and use this to inform your calculation. Otherwise, we can help by doing an appraisal on the property and can come up with an approximate figure by looking at rental prices for comparable properties in similar areas.

Do you have a question about investing in property? Contact us today and we’d be happy to help you get started on your exciting property journey.

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Shirley Smith

Founded
in1995


We are, and have always been, a family-run enterprise. Founded by Shirley Smith in 1995, the idea for Access Property Management was conceived when Shirley realised there was a high level of demand for dedicated property management agencies, a need that was not being met by the existing real estate market. The agency is now headed by Shirley’s daughter, Stacy Whiting, who joined the business in 1996, and her husband, Mark Whiting, who has been at the agency for over 18 years. This focus on longevity extends to Access’ dedicated team of qualified property managers, with most staff having worked at the agency for 9 years or more.

ORIGINAL FOCUS

Shirley’s original objective was to provide a closer link between property owners and high quality tenants provided by relocation companies and the corporate/executive sector. Over time we extended our services to better cater for the needs of all property investors and quality tenants, who were seeking a higher level of service, focus and experience.

27+ YEARS EXPERIENCE

For over 27 years, our family owned business has made an impact within the real estate industry in Perth Metro and based on our results we’ve established a strong reputation for integrity, distinction and innovation in real estate and management services.

Meet our team of dedicated property specialists.

“Mark, Stacy and the team at Access you are a pleasure to do business with. I highly recommend to anyone that requires high level, professional property management.”

Brett – Facebook

“I rented a property through Natalie at APM. She was attentive, proactive and professional – everything you could want in a property manager (as a tenant and as a home owner, as I am myself also). I highly recommend APM, their professional staff and convenient services.”

Daniel – Mt Pleasant – Facebook

“Many thanks for your help.  I have a couple of other properties and you guys are by far the easiest to work with and most professional.”

Dean – Owner

I would like to personally thank Kelly for her professionalism and pleasant manner when we were applying for a rental. My son Jarrod (18yrs) & daughter Nicole (22yrs) had been applying for rentals all of January with no success & I was disappointed that some of the agencies hadn’t even followed up on their good references to allow for a fair assessment of their application. As Kelly would know we were successful in this application but had to decline as we were also successful in purchasing a property in that same week. Kelly was very understanding and a pleasure to deal with. I will highly recommend your agency .

Heather – Prospective Tenant

“I have been using their services as a tenant, and I can say its an amazing experience. They are prompt at everything and quite helpful. Alongside, the property manager carry a great professional work ethics which is wonderful. You, as a tenant always feel accompanied by your property manager. Cheers.”

Rahul – Google

“It is always fantastic to deal with Stacy and the team at Access Property Management. Highly recommend to anyone!”

Anike – Facebook

“I have rented through Access twice since 2010 and both times have been great, particularly the last time when I rented in South Perth and my rental agent was Kelly Duncan. What a delight she was and is and nothing was too much trouble. Thanks Kelly for such a great experience. Shame I couldn’t stay with you.”

Vanda – South Perth – Facebook