Professionals Richmond Investing in a rental property is a big undertaking, and one that you want to be prepared for. You can do this by asking a series of questions as to which the answers will help you with your decision making.
What’s going on around the property?
You need to know what is presently going on or being planned for the area surrounding your property. You can contact the local council to find out if they have any developments planned for the future.
Property worth and value:
Just because there is an asking price for the property doesn’t mean that is what it is worth. Research other properties in the area that have recently been sold or have a professional evaluate the property for you before you make a decision to buy.
Local Market activity:
Check out the area of the property yourself and determine what is taking place amongst the present retailers located there. Determine if gentrification exists or is going to in the future. Also gather some demographics about the area. Again most of this information can be obtained from the local council.
Know what the potential is for renting:
Speak to a property manager to get idea of what rental income may be generated from the property. Have a look at popular rental listing websites to gauge what prices are being charged for in that area and for that property type.
Is this a short term or long term investment?
Are you looking to generate immediate cash flow through rentals, or is your goal long term in the equity that will be built? If your mandate is to buy several properties then you need to focus on the capital gains. Opting for immediate rental income without considering capital growth is good for the short term.
Who are your competitors?
If the market at the moment is loaded with investors then you will have a lot of competition in trying to generate your rental income. The local council can provide data on the number of home owners in an area, and caution should be taken in respect to large apartment housing blocks.
Be cautious with the title search:
Know what is being included in your purchase and that the title search shows this. Are there storage facilities and parking included? Ask for a community management statement so you can clarify what is available and should be included in the sale.
Accounting Statements:
You need to know the financial history of the property and you can determine this from the Body Corporate Disclosure which you have the right to see. Strata plans property have monthly maintenance charges that are collected and put into a sinking fund to cover the cost for the grounds and carpets and lifts for example. You need to know what has already been spent and the future work projections.
Identify your target market:
Determine who are going to be your tenants and what their wants and needs will be. Then ensure that your property is going to be able to meet these. Your tenants may have the need to be near amenities and transportation. Or if they are family orientated they will require a larger home with adequate outdoor space.
Are you prepared for the commitment?
You need to determine if you want a ready to rent property or one that needs to be renovated first. There may be a need for some minor improvements which you should allow for. Try to avoid properties that need major work or structural work before they can be rented. Look for easy maintenance properties and don’t forget to factor in the costs for property maintenance over the life of the property.