Home ownership is an Australian way of life and if you find yourself in the enviable position of being
able to enter into your first property investment, there are a number of factors to carefully consider
before you sit in front of the real estate agent and sign a contract!
Firstly, we would hope you’ve done a great deal of research in your pursuit of becoming a landlord.
Knowledge is power and is a vital key to you making the right type of investment choice for your
circumstances. There is a plethora of information available to novice property investors covered by
all sorts of media like books, magazines, reports, seminars, consultants and the like.
There a few basis on which property investment can occur so you need to familiarise yourself with
positive, negative and neutral gearing and be fully conversant with other terms like Loan to Value
ratios and rental yields.
Get your finances in order
Discussing your plans with an accountant and a tax depreciation specialist is a must to ensure you
are getting into the right type of investment for your financial situation. Negative gearing may work
if you are in a high income bracket but could spell disaster if you are on average wages and get
suckered into the wrong type of investment.
Don’t just assume if you have a job you are able to enter into the world of property investment. You
also need to work out the level of risk you are comfortable with. A number of important financial
factors come into play so you really do need to speak with professionals before approaching your
bank or broker to discuss a pre-approval for an investment loan.
Once you have processed all the information you have been given from the people in the know, your
next step is to source an appropriate property using the guidelines you have been given. These
parameters might include a residential property in a particular city, with a certain target
demographic and a determined purchase price.
When purchasing an investment property it pays to approach it as a business transaction. It is
critical you do your due diligence and leave the emotional attachment behind. Just because you fall
in love with a particular property, won’t magically make the numbers stack up if it is not within the
guidelines of what you should be looking for.
Make sure your real estate agent is on the same page and not wasting time showing you properties
that will not suit your brief. Steer clear of those mythical properties with returns that sound too
good to be true, particularly if it is being spruiked by a high pressure, unscrupulous property dealer.
When the time comes to sign on the dotted line, negotiate the best price possible and always sign it
subject to a building and pest inspection and a bank valuation. Thoroughly read the contract paying
attention to any special conditions or alternatively have a solicitor read the contract before signing.
Organise a tenant and insurance
If the property you have found already comes with a tenant, happy days! If not you will need to
source a reliable property manager to take care of the collection of rent, organise maintenance and
represent you in any legal issues that may arise with the tenants. If you decide you manage the
property yourself, ensure you are up to speed with all relevant tenancy guidelines as tenants have
rights you may not be aware of. Always adequately insure your valuable asset – your first and
hopefully subsequent investment properties, with an appropriate level of landlord insurance.
If you are thinking of becoming a first time property investor, contact us, SC Tax Depreciation
Specialists to ensure you are fully armed with the all the information and facts you need to take the
first step into a property portfolio.