6 property investment fundamentals

Whether you have an investment property portfolio or you’re thinking about using property as an investment strategy to help you achieve your long-term financial goals, it’s always good to remember some fundamentals about this type of investment.

  1. Long-term investment

Unless you are exceptionally good at renovating and remodelling and you have an excellent eye for picking up bargains, property is a long-term investment. You are not going to make money over a few months or even a couple of years by the time you’ve factored in purchasing costs. So be prepared to be in it for the long haul and be making five or 10 year plans.

  1. Do your homework

We cannot stress this fundamental enough. Speak to a financial specialist who can advise on your budget and help you understand the different investment strategies so you can use the one right for you.

When you look at potential properties, fully research the property so you can factor in all the running costs such as strata fees and council rates. Always check what the rental returns are and for how long past tenants have lived there. If there is a high turnover of tenants and/or the property has been sat empty for a while, ask why.

Also, fully research the area; is it earmarked for development? Are there any major transport links planned? These types of things can affect occupancy and the property’s future potential capital gains. When you’re researching the area, check the price of how much similar properties have sold for – that way you can ascertain whether a property is realistically priced or not, and you can make your offer accordingly.

  1. Keep on top of maintenance

Once you’ve bought your property, staying on top of maintenance is a must. If you don’t you’ll not only lose the respect of your tenants and potentially lose rental income, but you may also lose out on any potential capital gains when you come to sell the property.

Remember, many maintenance costs, such as plumbing, roof tiles and new flooring, are actually tax deductible. Check with your accountant what you can claim.

  1. Add value

Wherever possible, add value to your property; this may be in the form of simply adding built-in wardrobes or other storage spaces or you may go for something more ambitious, like updating the kitchen. Renovations such as these will not only attract good tenants and potentially increase rental returns, but will also help increase long-term capital gains on the property itself.

If you are unsure what your property needs doing to it to add value, talk to an expert in real estate; a good agent will advise on what you can do to improve the property.

  1. Revisit your strategy

House prices go up, house prices to down, your financial situation may change; life never stays the same! For this very reason, it’s important you revisit your investment strategy from time to time and look at figures; if things aren’t looking positive financially, sometimes it’s better to make short-term losses so you can realise that long-term goal.

  1. Use a property manager

Never underestimate our uses! We act as a buffer between you and your tenant, sort out issues and maintenance, advise on improvements to increase rental return, and most importantly ensure the property adheres to the latest legislation and you’re operating within the law. Plus, many property manager expenses are tax deductible.

Our knowledgeable and talented team has helped many people realise their financial dreams through property investment, and they are keen to help you. Our team know the process well, will guide you through it and will help make your property journey as stress-free as possible.

Give us a call on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au  or pop into our Cardiff office for a chat.

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