First home buyers advice for buying investment property instead: Mozo's Steve Jovcevski

First home buyers advice for buying investment property instead: Mozo's Steve Jovcevski
First home buyers advice for buying investment property instead: Mozo's Steve Jovcevski

GUEST OBSERVER

If you’ve decided that buying your dream home is out of reach but purchasing a property as an investment for its rental income is more attainable, here's my advice. 

Research your suburb 

Although some suburbs might seem ‘cheap’, it’s important to do some research on the demographics of the area you’re buying in to. What are the local schools like, who are the main employers, what’s the average age/lifestyle of local residents. All of these things help you determine what kind of tenants your property will attract. 

Choose a property with rental appeal 

When you’re looking at property, look for the things that would appeal to you as a potential renter, what is the outdoor space like? is it quiet? is the building easily accessible? what’s the parking like nearby? All of these things will help attract the right kind of tenants and ensure you get a good rental return. Also, if the property needs work to make it more appealing, do it as soon as you can after purchasing the property - while it might seem like yet another up-front cost, it will mean less ongoing maintenance. 

Choose the right home loan

The pricing and process for taking out an investor loan has changed in the past few months, with several lenders tightening their lending policy so it’s worth doing your research into which providers are offering loans for your loan amount and LVR at the most competitive rate.  

Go with a good agent 

As a first time investor you’ll likely want to use an agent to manage tenants, especially when it comes to finding them, checking their history and drawing up the rental agreement. Go for a trustworthy agent with local knowledge and a good track record. Over time you might be able to takeover the management of the property with the real estate agent only involved in the set-up phase.   

Take out Landlord’s Insurance 

Landlord’s Insurance is something that protects you in case of property damage or lost income if the property can’t be rented unexpectedly or your tenants do a disappearing act. 

Know your legal limitations

As a landlord you’re obliged to maintain a watertight property with a legitimate floorplan and all the relevant safety measures like fire escapes and fire alarms. Also, understand the approvals required for any renovations, maintenance or changes to the property and the notice you’re required to give tenants re accessing the property for inspections or making repairs.  

Budget for the maintenance costs 

On top of Landlord’s Insurance, you will have other costs to cover over the course of a year, including council rates, water rates or strata if you’ve bought an apartment. Plus, there will be things that need repairing and it’s always good to have a buffer of cash in case of an emergency ceiling leak.

Get a valuation every few years 

If you want to use the equity in your investment, refinance your home loan, sell or improve your property it’s handy to have a valuation done to know where you stand, it might open up several options you didn’t know existed.

 

STEVE JOVCEVSKI is property expert at Mozo.com.au.

 

FOR MORE INSIDER INFORMATION ON PROPERTY LOANS, RATES AND MORE: DOWNLOAD THE FREE MOZO EBOOK.

 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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