Whether you’re chasing financial stability, a passive income, want to build a retirement nest egg for the future, or just have an insatiable obsession with real estate (we hear you!), property investing is a strategy that millions of Australians have embarked on.
In fact, according to the 2019-20 stats from Australian Bureau of Statistics, one in five Australian households – that’s 2.02 million – own property besides the one they’re residing in. But learning about property investing takes time and with that, comes key lessons. Here are 5 things we wish we had known when we started, all those years ago.
1. Set your investment strategy
Before diving into property investment, consider your long-term plans and define your primary goal. Are you aiming for rental yield or capital growth? Your strategy will shape what kind of properties you consider. For example, some people prefer new properties because of their low maintenance and tendency to attract high-quality tenants, while older ones may offer the potential for higher yields or potential for value-adding renovations.
2. Understand the financials
There’s a lot more to consider than just the purchase price and mortgage repayments. As a landlord, you are responsible for ongoing expenses like property rates, strata fees, insurance, and maintenance. It’s crucial to calculate the potential rental yield and compare it with these expenses to ensure you can still afford to pay the mortgage, even if you don’t have a tenant for a period of time. Additionally, get familiar with financing options, mortgage rates, and potential tax deductions, then don’t forget to have a financial buffer to cover unexpected expenses.
Seek advice from financial advisors or mortgage brokers to get a clear picture of your investment’s financial health. This will help you make informed decisions and avoid unexpected financial strains.
3. Location really does matter
An excellent location boosts tenant demand and long-term capital appreciation. In particular, the closer to transport, the better. Keep an eye on areas with upcoming transport developments for growth potential, like metro stations, as we’re seeing significant growth in these areas. Proximity to amenities such as shops, parks, schools, and childcare centres also boosts a property’s appeal, potentially increasing its rental value.
4. Watch out for hidden maintenance costs
Some property features, while they might look aesthetically pleasing, can really rack up the maintenance expenses. Features like swimming pools, timber windows, paved driveways, and terracotta roof tiles often require more upkeep or can be more subject to wear and tear, which can diminish your returns. Look for properties with low-maintenance alternatives, such as aluminium windows, concrete roof tiles, and easy-care landscaping to help keep your maintenance budget in check.
5. Air conditioning is a must
Would you want to live without air conditioning in Sydney’s scorching summer? Well, neither do tenants. Properties with air conditioning are much more appealing to tenants, expanding your pool of potential renters and justifying higher rental prices. In fact, many tenants won’t even inspect a property if it doesn’t have air conditioning.
Whether you’re exploring locations, crunching numbers, or searching for the perfect investment property, our expert team is here to provide personalised advice and market insights. Contact us today using the details below for guidance on your investment journey.
The information referred to in this article was obtained from publicly accessible sources, including from the ABS. The information provided in this blog post is for general guidance only and should not be taken as personal advice. We do not accept any liability for any errors or omissions.
Prudential Real Estate Campbelltown | (02) 4628 0033 | campbelltown@prudential.com.au
Prudential Real Estate Liverpool | (02) 9822 5999 | liverpool@prudential.com.au
Prudential Real Estate Macquarie Fields | (02) 9605 5333 | macquariefields@prudential.com.au
Prudential Real Estate Narellan | (02) 4624 4400 | narellan@prudential.com.au
