Taking the first step in your property investment journey can be an exciting yet formidable time. Although buying an investment property can be a great way to set yourself up financially, it’s not a fail proof investment strategy, and you need to have a comprehensive understanding of what you’re getting yourself into.
Ready to get started on your property investment journey? We’ve produced this guide to property investment to help you make well-informed decisions. If you’re looking for individual advice on your property, you can get in touch with us, and we’re happy to help in any way we can.
1. Understand property investment strategies
Whether you’re planning for retirement, expanding your portfolio or trying to pay off your mortgage, there are multiple property investment strategies out there. Your individual success will depend on your life goals and financial situation. It’s wise to make sure you have considered a range of factors before making any concrete decisions. We recommend consulting a financial adviser before you make any big moves.
Property is a long term investment strategy, and it’s important to be aware that you may only break even or even lose money initially. The property market tends to change with little to no warning, so when property values go up, remember that they also go down.
Here are a few factors to consider when choosing the property investment strategy for you.
Rent-ready properties can be a great source of income if the rent is greater than the expenses. To gain a solid understanding of your cash flow, you’ll need to consult a financial expert first.
Secure capital growth
Properties tend to grow in value over time, leading to steady capital gains. In the future, you can choose to move into it yourself, sell it, or use the income to supplement your retirement.
Safer investment option
Although there are many investment opportunities such as stocks or bonds, property investment is generally regarded as a safer option due to its low volatility.
Some property investment strategies come with unique tax advantages. Have a look at this guide to tax for property investors to start gaining an understanding.
2. Review your finances and set goals
While it can be tempting to start planning for the future right away, you need to have a clear view of your current circumstances first. Start by reviewing your credit report and history. Then, consider whether you need to prioritise other important financial goals like paying off debt. This will allow you to set a realistic budget within your means. Consider the upfront costs of buying a property, managing tenants, maintenance and repairs. Before you start looking, make sure you’re ready to buy and have loan pre-approval so you can jump straight away if you find the right property for sale.
3. Consider the market conditions
Even if you’ve decided on a property investment strategy and are financially ready, it might not be the right time to purchase a property. You’ll need to first take into account what’s going on in the current market to make a decision.
In 2021, we saw the global pandemic impact the Perth property market. Still, we also had some positive growth for the economy, giving us some much-needed optimism about future recovery. As borders open this year, international and interstate movements will grow, further helping our economy recover firmly. The latest statistics from REIWA suggest that our strong property market conditions will continue. Here are a few factors to keep in mind if you’re considering investing in the Perth property market this year.
- An increase in the Perth population means increased demand for property, driving prices upwards.
- We’re expecting an estimated further 10% increase in house prices.
- Median rent prices are estimated to increase by around 10% to 15%.
- Our rental shortage continues to be an issue, and tenant demand remains high.
So what does this mean? Ultimately, we need more investors in the market to help keep up with tenant demand, and overall it’s a good time to invest. We’re already seeing signs of savvy investors coming into the Perth market to capitalise on these conditions. This will keep Perth’s sales volumes at healthy levels and increase listings for sale as investors take advantage of the increased prices.
4. Find the right property
Your financial goals should help guide you on what type of property you should invest in. Some properties are better for immediate cash flow, whilst others may cost you more initially but increase in value over time.
When looking for an investment property, think like a tenant. Apartments near the CBD are likely to attract young professionals, while a house in the suburbs is more suited for a young family looking for vastly different things in their home. There are a few features that help to attract quality tenants, such as air-con, alfresco living spaces, accessible parking and good quality fixtures and appliances. If the property you’re looking at doesn’t have these, you may want to consider the cost of putting them in. You will also need to assess how much it may cost to cover expenses such as maintenance and repairs.
When looking for an investment property, try to find a sought after location that will inevitably grow in value. While it’s beneficial to know about location trends, if you know about a “booming suburb”, it’s probably too late to buy in that area. You can also check out this REIWA price data of Perth suburbs to start your research. Aside from prices, other factors to consider include proximity to schools, public transport and recreational facilities. It’s also a great idea to look at areas where significant infrastructure projects are planned.
Ready to purchase a property but want to make sure it’s tenant-friendly? We can help. Book a free appraisal with us, and we’ll let you know what it could be worth.
5. Attract and retain long-term tenants.
Once you’ve purchased your investment property, you’re ready to put it on the rental market unless you need to make any immediate repairs or renovations!
If you’re committed to your investment goals, finding a great property manager to support you is a must. Rather than simply just collecting rent, property managers should take an integral role in the financial success of your investment. They’ll also be able to guide you on attracting long-term tenants and successfully market your property. You can find out more about finding a great property manager here.
Once your property is tenanted, you’ll become a landlord, and that comes with its own responsibilities. We’ve written a guide to landlord obligations so that you can properly fulfill them and avoid issues down the track.
Access Property Management
Need some help achieving your investment goals this year? We’re happy to help in any way we can. You can contact us here with any questions about property investment.