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Monday 9 December 2019
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Three things to consider when buying to rent

Three things to consider when buying to rent

It is most people’s dream to own their own home. Once you own your own place you are essentially secure, with a ‘nest’ in which to raise a family and a haven in which to grow old. Once it is yours it is very hard for you to be kicked out. Owning a second or third property, by way of an investment is not everybody’s idea of fun, or of a safe investment, but for many it is the way to go. So, if you find yourself in the position of looking to invest in a rental property, here are a few things to consider.

It is not always easy

Anyone who owns their own home will tell you that it is a lot of work. There is always something that needs to be repaired, altered or maintained. It is a steady flow of jobs, from simple things like mowing the lawn to more complicated issues like repainting, installing cupboards or sanding floors. When you own a rental property there are a similar number of issues, plus you also have the demands and expectations of a tenant to manage. For many the simplest thing to do is to find an agent who will take care of it all for you. An online search for something like, ‘property management Truganina’ should provide some appropriate results of companies in the area. Make contact, negotiate a fee and suddenly it is a whole lot less hassle.

Know your investment personality

If you are a risk averse individual, then realestate is probably not the best place for you to invest. For many the idea of having a tangible asset seems like a good idea, but the truth is, unless you are open to a degree of risk and are prepared to move forward in a less than liquid state, then property is not for you. Rental prices fluctuate and so do resale prices. There is also the factor of repairs and costs which are simply not present with more traditional investment vehicles like mutual funds or stocks.

Understand your motivation

When investing in property there are two scenarios that could play out. The first is if you are looking for capital growth. In this instance you buy cheap in an up and coming area, you do some repairs, you wait for the market forces to come into play and for the overall value of the property to increase and then you sell for a handsome profit. The second angle is less about capital growth and more about finding a return on the investment by being able to rent the place for more than the mortgage. In the second scenario you are less concerned about capital growth and more focussed on the value of the rental income and how easily it is able to offset the costs and monthly payments associated with levies and interests. These properties are harder to find but patience is your ally, and if you wait and look long enough you will find apartments or properties that offer genuine value and the ability to contribute to cash-flow from day one.




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