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1. Condition of the House
Checking the condition of the house and being realistic about the time and money you are going to invest in it is the most important factor. Find out whether it is worthy to buy a fixer-upper and then spend money to renovate it. Before buying any property, run a thorough inspection, take professional advice and estimates about the possible repairs and fixes it needs, and make sure to resolve all the issues before anyone moves in, as an unsafe property can lead to crucial consequences if tenants get hurt or sick.
2. The 1% Rule
When it comes to returns, every investor has set their own goals, but the income generated from an investment property should be at least 1%. For example, if you buy a property for $200,000, it would need to bring in $2,000 a month. This amount is calculated by a simple math equation, dividing the estimated monthly rent by the price of the house ($2,000/$200,000 = 1%). However, property investment strategists in Melbourne suggest that you should consider buying a property that doesn’t abide the 1% rule if the property is in neighbourhoods that show signs of rapid change and improvement, because the home values and rents will possibly increase over a short span of time.
3. Property Taxes
From an investment point of view, you should always think twice about the taxes. The taxes will be higher in metropolitan areas and lower in rural places. Even if you find a perfect property in the right neighbourhood, high property taxes can take a big chunk out of your rental income every month.
4. Insurance Costs
Insurance costs can take much out of your profits, so be sure to carefully decide what kind of coverage you need for the investment property, whether you to pay a smaller premium or wants coverage for tenants’ personal property. Once you have made your decision, start comparing rates on online insurance website or call customer service for customized plans based on your needs.
Finding the best neighbourhood is an essential part of property hunting. Choose an area wisely where people want to move in. You should look for an area which has secure perimeters, well-maintained streets, and if you are planning to rent to families then make sure that the area has some well-ranked schools. If you are planning to start your journey of property investment and need some professional advice, reach out to our experts at 10 Properties in 10 Years. To get in touch, give us a call at 1300 617 677 or leave us a message at [email protected].