When it comes to property, location is an important deciding factor that not only determines...
Baxton Property Management: Avoiding investment property mistakes
According to Baxton Property Management in Hobart, there are a few common mistakes investors can make when they invest in property. Property is a good long-term investment and can be low risk if all the boxes are ticked.
Lack of research
Not getting to know the suburb and the property you would like to invest in, can have disastrous effects on your investment. Make sure you visit it a few times at different times of the day. Is it really noisy in peak traffic? Are the neighbours party animals over the weekends? Is the neighborhood safe?
Check the metrics. Local employment, historical growth, unemployment rates, vacancy rates and population growth, are just a few that will reveal a lot about the property you would like to invest in.
Statistics show most investors buy in their own backyard, but that is not necessarily the best buy. This is based on an emotional decision and not on what makes good business sense. A property may seem extremely appealing if you have good memories associated with the area. And if the property charms you with its design and lush garden, you may convince yourself it will work as a rental property. However, that’s not always the case.
Jumping into the rental pool without learning to swim
Many first time investors leap into property investment without really knowing what’s in store for them. The tenants who occupy your house can make or break the outcome for you.
Before choosing a property it’s important to decide who you would like to rent to, young single professionals, or families? Make sure the property fits the requirements of that market. If you put yourself in your future tenants’ shoes, would you happily live there?
However, there’s no point deciding on a category of tenant if there are unlikely to be people in the area who fit that profile. For instance, if you are targeting young professionals as your tenants of choice, make sure there is work in the area. A good idea then would be to target areas in big cities that are within a 15-mile radius of the CBD.
If your chosen tenant type is families or retirees, their needs regarding a rental house, unit or apartment, would be different. The home they are looking for might need to be single level or have a child-friendly garden.
Selling too soon
Don’t become impatient and sell your property too soon. Try and hold onto it for at least 10 years. But don’t let your investment stagnate while you wait for the property market to reach the correct moment for you to sell. Keep an eye on market trends and increase the rent by small increments at a time, but regularly.
First and foremost investors should know their debt, and how to use it to leverage their cash flow. Spare cash should be used only to pay non-tax deductible debt such as personal loans on cars or holidays. Only when this non tax-deductible debt is cleared, is it wise to move on to the loan on your investment property. This will lead to extra cash at tax time.
Mishandling your debt will hamper your progress and cost you dearly in the long run. Instead use the tax situation to your advantage. Create a long-term strategy and stick with it. Another mistake some investors make is to stack their personal and investment mortgages on top of each other, which could also lead to negative tax implications. The best bet is to get professional advice on the matter.
Thinking you can go it alone
Last, but not, by any means, least… Many investors start out thinking they will save money by managing their own investment property. They end up having to spend so much time getting to know the ins-and-outs of rentals that they have no time to keep their eye on what they should be focusing on – their investment.
Baxton Property Management in Hobart has seen many owners in a panic because they just can’t cope with the demands of tenants, or don’t know how to screen for the best tenants. Leave it to the experts, as they know what they are doing. Contact Baxton for to discuss their property management service, or for advice on your valuable investment.
- Hobart property management: 10 tips on choosing investment property
- First time residential investor? Baxton’s tips on managing your choice
- Property Investors: Is self-managing for you?
We hope you enjoyed this article
The information contained in this article is based on the authors opinion only and is of a general nature which is not indicative of future results or events and does not consider your personal situation or particular needs. Professional advice should always be sought relevant to your circumstances.
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