Getting the Most Benefit From Your Property Management Company

Investing in real estate can build wealth; consider these important tips when purchasing real estate to use as a rental property.

According to CoreLogic, there are an estimated 2.6 million investor-owned properties across Australia. These properties are collectively worth $1.37 trillion and help investors to increase their finances and improve their future.

Investing in rental properties is a great way to passively invest your money into a project that doesn’t require too much maintenance. Rental properties also have a good return on investment, meaning you can start earning sooner.

However, finding a Perth investment property that provides a good yield takes time and knowledge. Read on to discover the pro-tips for buying a profitable rental property.

1. Think About Your Goals

The average real estate investor is estimated to be a 42-year old man. 72% of whom are married and it’s estimated that fewer than two-thirds of investors get finance with a co-borrower. But no matter who you are, property investment can be very profitable, when you do it right.

The key thing to consider when it comes to Perth rentals for investments is to think about your goals and to choose a property according to them. For example, if you want money to supplement your income sooner rather than later, you need to choose real estate that is better for positive cash flow. This might mean choosing a property that requires little to no improvements.

Another goal example is that you have Perth homes for rent for the next few years, with the end goal of selling them. If you intend to sell the rental investments for profit then you’ll need to complete the necessary home improvements. Adding more curb appeal and value to your properties when you buy them will save you time and money when you later decide to sell them.

When evaluating your goals and choosing a rental property, remember to think about:

  • the rental demand in the area
  • the maintenance costs and time of the property
  • the location and local amenities
  • the property value (i.e. will it increase over time)

Write down your goals and keep them in mind when you’re looking at prospective properties. You might also share your goals with your realtor, so they can help you decide which property is best for your investment needs.

2. Evaluate Cash Flow

There’s no point in investing in a property if you aren’t going to see a good return on investment. That’s why you need to look at the cash flow of a property.

The cash flow you receive from a rental property is from the tenancy in the form of rent payments. While the cash flow you pay includes the running costs of the property (maintenance, utilities, mortgage payments, rates, and any other fees).

It’s not uncommon for investors to lose some money at the beginning of their property investment. That’s because the rent won’t initially cover the cash flow you pay out (such as mortgage payments).

However, over time, as mortgage payments decrease and rent increases, you’ll start to breakeven and earn a profit. But getting to a stage of earning a profit from the property may take time, which is why evaluating the cash flow is important. If you are struggling to work out your cash flow make sure you speak to a mortgage broker.

3. Speak to a Property Manager

Most people assume property management is only for after you’ve bought a property. But that’s not always the case. While property managers are commonly used to help attract and find a tenant for your rental, they can also help you decide where to buy.

As we’ve mentioned, you need to think about your goals before buying a property and who knows the market better than anyone? Property managers will be able to tell you what type of properties are currently in demand. They’ll also be able to tell you about the best locations and the return on investment you can expect.

For example, if there’s a sudden demand for Perth townhomes for rent then your property manager will know and will be able to tell you more about the tenants looking to rent that type of home.

Once you’ve bought the property, the property manager can then help you with finding tenants. During your working relationship together, you can also ask the property manager for advice regarding your responsibilities as a landlord, your rights, and property law. Property management teams can also take care of maintenance in your property during the tenancy.

4. Carry Out Necessary Checks Before Buying

This one should go without saying, as not conducting checks before you buy can result in costly maintenance repairs. Before you buy any property, make sure you have a professional and certified builder inspect the house. This inspection should consist of a thorough check looking for any potential problems that need fixing.

After you’ve bought it, make sure you get these checks carried out regularly on your property. It’s advised to have your property checked once a year.

If there are any problems that come back on the report, then you might be able to negotiate the sale price of the property. And when it comes to fixing any property problems, always ensure you use qualified tradespeople (who are insured).

Invest in the Right Rental Property

Purchasing a profitable rental property is all about examining and evaluating prospective homes and your budget. Remember that whether it’s your first property or your tenth, it’s always a good idea to speak to advisors and those in the know about the property market.

Are you looking for your first or next rental property? Then get in touch with our experienced agents who can help you find your ideal investment property at the right price.

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