First time investors' common failings
When it comes to buying investment property in Australia, everyone has to start somewhere. Much like riding a bike, it's tricky to get it perfectly right the first time. The big difference is that purchasing property is a much larger investment than a pair of training wheels. If you're a first-time investor looking for a little bit of advice, the best way to avoid falling into the same traps as others is to do your research and keep an eye out for the telltale signs of movement in the market.
After all, you don't want to end up spending a large amount of money on a property that won't have the expected returns in the long term. A portfolio's only as strong as the weakest property, so here are some common pitfalls that first time investors fall for, which can help you make the most of your first experience in the market and get your foot up on the Australian property ladder.
Never underestimate the importance of market research
Half the investment battle is fought before you even begin looking at specific properties and home loan options, with extensive research and market understanding being the not-so-hidden weapon that can save you from making a grave mistake. Being well informed and having the right knowledge to influence and back up your decisions is essential, as well as knowing the right places and people to ask for unbiased and truthful information.
Before looking into real estate, ask yourself how intimately you know the local market. There is a wealth of information available online that can help you plot and plan your movements into the real estate market - all you need to do is seek it out. Understanding things like median house prices, auction clearance rates, the average number of days a property is on the market, expected rental yields and vacancy rates are just a small number of the various factors that can affect your investment decisions.
Furthermore, getting in touch with local real estate agents can also provide you with some expert insight into the local market from someone who regularly operates in the area. They can help you understand the sentiments of buyers and sellers in the market, as well as offer their opinion about the general trends occurring in the local community.
Ensure you fulfill your landlord responsibilities
Many people think property investment stops with the deed being signed over. However, there's a lot more expected from investors and landlords following the completion of a sale. In fact, from the get go, your property will begin to be a money drain unless you proactively search for tenants to occupy the space and start receiving rental payments from them.
Your responsibilities as a landlord include things like taking care of any issues that arise with the property, ensuring the expenses are paid on time, and conducting regular property inspections to make sure the real estate remains in tip-top condition during your tenants' stay.
if you're unable to fulfill these obligations, it's possible to hire someone to take of these issues for you. They're called property managers and will assume the role of landlord for you, taking care of the day-to-day running of the property while you sit back and reap the rewards of a successful property investment.
This could also be a great avenue to consider in general, especially when it comes to the legal obligations of both landlords and tenants. Property managers often have an extensive knowledge of tenancy law, which will ensure that neither party violates the rights of each other - whether it be accidental or intentional.
Image credit: StockMonkeys.com