What Should I Look For If Investing In A Property?Wednesday, 11 February 2015 -
A common Frequently Asked Question (FAQ) we receive is, What Should I Look For If Investing In A Property? Our CEO, Melanie McFarlane was recently interviewed on Business Trends TV to answer this FAQ.
Ryan (Interviewer): Ryan here with Business Trends TV and another question that I have for Melanie is if I have an investment property what should I look for if I’m buying an investment property Melanie?
Melanie: Well, it's really important to sit down and think things through before you start house hunting and I'd probably advise speaking to an accountant or an investment advisor because your investment blow if you like may have a bit of an impact of where you actually look to purchase property. so the first thing you want to think about is are you looking for a property where you going to get increase in values so you’re looking at capital growth or if your looking for a property that going to give you a really good rental return. So the way to figure out a rough rental return is look at what that rent would be, so what rental income you would achieve over a year so whatever the weekly rent is, times that by 52, that will give you a annual income and then subtract off what you think the running’s costs will be for the property. so you’ve got to factor in council rates, water rates, getting smoke alarms looked at, have a budget for repairs and maintenance as well so subtract off a rough amount for what it would cost to won that property by the year and then you’re looking a dividing that end return by the purchase price of the property and that will give you an indication of what return you going to get from that property. Ideally you’re looking for a return of at least 5% in most cases but again speak to your accountant or financial advisor and they will be able to give you some guidance there. Once you’ve got that information you can start to look at areas and ideally you’re looking for the best area you can afford so when you’re in a slightly sort of better area then you’re generally going to get a better quality of tenant, someone who’s going to look after your property and obviously that’s really important. The other key factor to consider is the ongoing maintenance so the types of things that can be a little bit more expensive to run in a rental would be thing like swimming pool, you might really like it as a home owner but it does cause a few issues or a few extra things that we’ve got to do to look after it so there’s a few more running costs there. lots of timber again looks awesome, looks beautiful, we might love it but it does require ongoing maintenance. so ideally you’re looking for something that low maintenance, low maintenance gardens, things that are going to be hard wearing and something that present nicely as well. Like sales people who are out looking for rentals, first impression is going to make a difference for them, so neat, tidy clean, things that look nice you probably going to get a bit more interest, it’s going to look nicer in photos and you’re going to get a tenant a lot more quickly. So there the kind of thing is that you could look for, also don’t forget to perhaps ring a property manager in the area as well and talk to them about what properties are renting easily. I’m more than happy to talk to you if you’re looking at anywhere in Baulkham Hills, Ropes Crossing, anywhere on that sort of Northern Western corridor, if you’re looking for property, give me call, I’m happy to talk to you about it. My number is 1300309700 or you can always contact me through the website as well MCMpropertyservices.com.au. I'm more than happy to help answer your questions before you get out house hunting.