How To Prepare For Buying A Rental Property

How To Prepare For Buying A Rental Property

POSTED BY Ann Paterson ON 03 Dec 2019

What do novice investors need to know?

Building a successful property portfolio requires commitment, perseverance and strategic thinking.

Here is Ann Paterson Real Estate’s guide to preparing for the all important first investment.

1. Understand your goals and what you can afford

What do you want to achieve by buying real estate as an investment? What are you short-term, medium-term and long-term goals? How much will you spend?

Make sure you are clear about why you are pursuing investment in this asset type, including your specific requirements (i.e. rental return/financial goals) and your initial and ongoing financial commitment.

This is where you need to speak to lenders about pre-approval for any borrowings you need to complete your investment transaction.

2. What do you want?

Once you know why, and how much, you can work out what you want to buy. Will it be a metro or regional property, a house or an apartment? Do you need a specific level of ongoing rental income to cover its ongoing costs? Do you plan to buy a property you can improve with cosmetic and/or structural works?

Are you seeking capital growth or rental income – or both? Is there specific a state or territory, a city or township, in your sights?

3. Research, research, research

If you haven’t already been keeping an eye firmly on the market, this is the time to get cracking. Study recent comparable sales and prices in areas of interest. Speak to local agents. Let them know what you are looking for so that they can keep you in mind if suitable listings hit their radar.

If you can, visit the suburb/s at different times of day and night to build knowledge of the geography and demographic and consult the local council about planned developments that may impact your market.

4. Monitor supply and demand

Making wealth from real estate stems from rental returns and appreciation in asset value. Property investments appreciate better over time in areas where demand outstrips supply. With this in mind, keep a keen eye on how long listings remain on the market and for an influx of new properties from development projects. If you are planning to hold your rental property long-term, this may not be a deal-breaker. But it is important to get a feel for your chosen location’s housing stock levels and buyer/rental demand to ensure this supports your goals.

Features such as water views, generous floor plans, proximity to parks, shops, transport or schools and parking appeal to tenants, and will appeal to buyers when it is time to sell your investment.

5. Get your team in place

Finally, before you buy any property, it is wise to have a trusted legal expert, building inspector, accountant and – if necessary – lender, property manager and/or buyer’s agent lined up.

The choice of selecting the correct agent can be a stressful process and should be one of careful consideration. Our goal at Ann Paterson Real Estate is to be there to guide you every step of the way through an ongoing connection throughout the entire course of the sales or buying process and beyond.