Investor property tips
- Buying in the same area you live in is often preferable as it is easier to keep an eye on the property. Driving past the property regularly will help you stay on top of any potential problems
- Three or four bedroom homes are usually easier to rent and normally have a quicker chance of re-sale should you need to sell any time in the future
- Low maintenance cladding materials on the exterior of the home will help to reduce ongoing maintenance costs
- Double income properties, for example homes with a granny flat, often offer excellent rental yields
- The location of the property tends to be more important than whether the property is a house or a flat
- Properties down a right of way are difficult to inspect from the road
- Look for properties that have an X factor. Can it be extended? Is it sub-divisible? Is its location superior?
- Organise your finance before signing an agreement to minimise the conditions applicable.
- Attach the cheque for the deposit to the agreement so that it is staring the vendor in the face when the agreement is presented
- Set yield criteria for your property purchase. Try to achieve a rental yield higher than the rate of interest
- Develop a relationship with your Mortgage Broker. They will save you time and money. Speak to them regularly about your future investment plans
- Consider a revolving credit portion of your loan to give you flexibility
- Fixed interest rates reduce risk. Floating interest rates create flexibility
- Keep accurate, complete and tidy tax records
- Spread your investments. Target some properties with high yields and low potential for growth, and also target properties with lower yields and a higher potential for growth. A balanced portfolio is always a good idea
- Make your investment property loan interest only if you still have a mortgage on your home. Make all the principal repayments on your home loan, as this is not deductible
- Use an accountant for your tax work
- Always maximise your depreciation claims by having your chattels valued
- Be nice to your tenants. They will be nice to you in return
- Always respond quickly to a tenant request
- Review your rental rates, both up and down, according to the market
- Consider using flexible investment structures like LAQC (Loss Attributing Qualifying Company).
