5 STEPS IN MASTERING PROPERTY INVESTMENTS
Property investment is a good way of growing your wealth and having more income. However, diving into this venture requires knowledge and guts. To help you start investing in properties and building your property portfolio, here are five steps you should take to master buying rental properties:
Step 1: Getting to know the market.
Market research is one of the essential tools an investor must have. Without this, you could make an ill-informed decision that might have lasting effects.
How do you do market research? We suggest doing the following:
- Research these key factors:
- Broad Market (for example, Cairns)
- Local Market (the exact Suburb you want to buy in)
- Employment Sectors for Region (Medical, Tourism, etc)
- School Districts
- Average Home Price
- Target Home Price
- Average rent for the area
- Create a profile for the average resident in the area. Research the occupation, income, hobbies, type of vehicle, number of children, family etc for the suburb.
Through these, make different sub-markets and think of how you can connect to your prospective tenants. Because each sub-market has different needs and budgets. For example, a newlywed couple and empty nesters have different wants and requirements for a home. Who is your ideal tenant?
Step 2: Picking the right kind of property.
After knowing the market, look into the type of property you want to invest in. To do this, you should consider two things: objectives and risk. What are your goals and how much risk are you comfortable in facing? These things are important to know as it will help you choose your sub-market and with it, the kind of property you want.
Different properties have different yields and costs, especially in maintenance and other fees. Know the average rent on different kinds of properties, average annual maintenance costs, and length of tenancy in the area.
Step 3: Finding trusty people who can help you.
The next thing you need to do is to find people who can help you—property managers, agents, and contractors. These are important partnerships so you should find people whom you can trust and have a lasting partnership with.
Make sure that the people you work with are knowledgeable, experienced, licensed and insured. The last two are the most important when it comes to contractors as bad contractors can cause you stress and more expenses.
Step 4: Knowing Your Tenant
Another essential tool of an investor is understanding your tenant. It’s important that you screen potential tenants well for your investment to succeed.
Having a bad tenant is detrimental to your investment, and a good screening system is a way to save yourself the trouble and expense. This is where a property manager comes in.
Step 5: Putting processes and systems in place.
To complete your investment strategy, it’s important to have those in place to ensure that your investment runs smoothly and helps you control risk.
Here are some systems and processes you should keep in mind:
- Rent collection and evictions
- Payment methods tenants can use
- Reminders to tenants about rent deadlines through letters and emails
- Reminders to the tenant with arrears
- Collection meetings
- Eviction process when a tenant fails to pay rent after a certain period of time
- Tenant-Landlord Laws
Keeping up with the current regulations and statutes regarding commercial real estate is important so that you’ll know both you and your tenant’s rights and obligations. For convenience, constantly check the Residential Tenancies Authority’s website for any changes and updates. Also, you might want to consider consulting with a solicitor to help you navigate the complicated maze that is real estate law.
- Routine Inspections and Maintenance
- Routine inspections are mandatory, every three months according to the Residential Tenancies Act. Create a schedule on routine inspections—it’s better if you put it in the lease.
- Create a maintenance schedule.
- Perform routine maintenance on critical services.
- Make sure to have a standard operating procedure regarding emergency repairs.
- Marketing and Property Viewings
- Determine which platforms you’ll show your listing—will it be on real estate websites, physical signage, social media or all of them?
- Determine what will happen at viewings.
- Anticipate all questions prospective tenants might throw at you and have prepared answers to them.
- Monitor what tenants are saying about the property—if it’s something you need to work on, do it immediately.
- Be consistent.
Armed with new knowledge, are you ready to take on this journey? If it all sounds too much and you would like some help to manage your properties or to build your portfolio—we’re always here and happy to help! With our expertise and high-standard practices, we can help you manage your property and steadily grow your wealth! How? You just need to contact us. We’ll be happy to hear from you!
CHAMPIONS IN REAL ESTATE