According to Chris Gray, property expert and author of The
Effortless Empire - Building wealth from property, investing in Real
Estate.
6 Steps To A Profitable Property Investment
If you’re thinking of investing in property, these six steps will help
you invest in the right property that delivers profits now and in the
future.
Real estate is a fantastic vehicle for building and
holding wealth – provided you invest in the right types of property,
that is.
1. Choose property that’s attractive to tenants.
It
should be clean, have good-sized bedrooms, ideally with off-street
parking, and good positioning away from noise and main roads.
“You’ve got to buy something that suits the majority of tenants in that
particular area,” Gray says. “Features such as these will ensure your
property is attractive to renters and will guarantee your income
stream.”
2. Choose property that will grow in value.
Sounds like a no-brainer, but it can be easy to mistake a lemon investment for a good value prospect.
"If the property is close to a major CBD, beaches, schools, public
transport and leisure facilities, it’s more likely to grow by more than
the average in a good market and is more likely to hold its value in a
down market," Gray explains.
Keep in mind that if you buy around
the median price, then more people can afford to rent it and more
people can afford to buy it, if you were put into a forced sale
position.
3. Buy blue chip.
“Cheap properties are cheap
because they’re not in great demand and there’s plenty to choose from,”
he says. “It’s often worth paying market value for a good property in a
top suburb than it is to get a discount for something that no one else
really wants.”
4. Create instant equity.
Do some quick
renovations such as a paint job, re-carpeting, tidying the garden,
painting the fence, installing new curtains or blinds and replacing the
kitchen-cupboard doors. “For every dollar you spend on renovating you
should be aiming to get at least $1-2 back in the value of your
property,” Gray says.
5. Refinance your property to create a buffer.
When
your property grows in value, refinance to create an emergency cash
buffer zone. “You don’t want to find yourself in a forced-sale position,
as you won’t get the best price and it may trigger capital gains taxes
and other expenses,” he warns. A cash buffer will ensure you can
continue to make mortgage repayments even if you lose your job.
6. Re-sign your tenants.
It’s so important that you hire a professional property manager to
ensure you get reliable tenants and that they pay a good market rent.
“Aim to tie your tenant down to 12 month agreements, to help guarantee
your rental income,”
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