According to the Australian Taxation Office, one in seven Australians owns an investment property. A common perception is that you need to be rich to own an investment property, but in fact more than two thirds of all investment properties held by Australians are done so by people earning less than $80,000 a year!
[source: ATO April 2011]
Simply put, the average Australian is ‘saving’ for his/her retirement by buying property. The combination of rental income, potential capital growth, improved future borrowing, not to mention tax benefits, is luring the average Australian to purchase investment property.
It’s important to do your research when buying an investment property. Some of the key considerations include:
- Choose a property that will be attractive to tenants: The property should be clean, have sizeable bedrooms, in a good location away from main roads, and ideally feature off-street parking.
- Consider the nearby infrastructure and amenities: A property that’s close to the CBD, beaches, schools, public transport and leisure facilities is more likely to grow by more than the average in a good market and to hold its value in a subdued market.
- Check out price history: Look at how rents and property values in the area have been performing over the years.
- Engage the professionals: Using a professional property manager is important to ensure you get reliable tenants and that they pay a good market rent. Again, do your research when looking for a property manager: ask what services they provide, how often they inspect a property, how many properties they’re currently handling.
- Buy a ‘blue chip’ property: It’s often worth paying market value for a good property in a good suburb than jumping in and securing a cheap property (it’s probably cheap for a reason!)
- Enhance your property: if you do some easy renovations such as repainting, laying new carpet, installing new curtains or blinds, or installing new bench tops or cupboards in the kitchen, this could be easily repaid in higher rents and/or capital growth.
(Lyndal’s blog, August 2012, PropertyFinanced.com)