Now is the time to start that property portfolio you have been dreaming about!
With the interest rate at an all-time low and the market geared to favour buyers, now is a great time to consider building on your property portfolio.
While the ins and outs of each investment property should be individually considered there are certainly some hard and fast rules that seasoned investors never ignore when looking to add to their property portfolio.
Patience is a property virtue
Hasty decisions could cost you big bucks down the line. Take the time to understand the investment, research the market, consult experts and do comparative analysis before committing. Compare price and value, and don’t allow perceptions of value to cloud your judgement about price, or vice versa. Most property investments are long-term commitments, so be prepared to sit tight for the long haul.
Location location location
Start with the area you know! The tagline of every great property investment, location is a key determinant of a property’s anticipated appreciation. As such, consider the property’s proximity to amenities like schools, shopping centres and hospitals, as well as to major transport routes.
Rental income vs capital growth
The real value of the investment is determined by capital growth and not rental income. So while your investment property might fetch a good rental price each month, be sure to consider the capital growth.
Seasoned investors approach a property with a checklist to ensure that it is in good condition and to help them better anticipate and plan for maintenance, renovations and repairs. Pay particular attention to things like the integrity of the walls, the foundation, the condition of the finishes and the workmanship of the electrical components and the plumbing. A trusted property advisor is able to help you establish the state of an investment property, or you could consider hiring a certified building investor to do an in-depth inspection for you.
Maintenance costs should form part of the budget for the property. Investment properties need to be looked after in exactly the same way as a primary residence. Even if an agent will be managing the investment for you, the onus is still on the owner/investor to ensure the property is properly maintained.
Don’t forget that something is only an investment if you can afford it. Affordability is determined by completing a personal cash flow statement of all your income and expenses.