Are you thinking about property investment in Perth? With Perth heating up for property investors all over Australia recently, how would you go about ensuring that you have purchased the right property and how do you ensure its continued profitability?
Property investment can be a great investment return provided you do it correctly.
Although property managers are not property investment advisors, through their experience, they provide valuable insights worth considering on this major commitment.
Let us consider what are some benefits of property investment in Western Australia?
- Provides financial security
Based on historic charts, capital growth is a major benefit of property investment provided you have time and patience. Never over-invest and ensure that you have enough savings in order to help you out if your cash flow is tight. If your rental income is more than your expenses including your mortgage, then your investment can be another source of income for you.
- It is regarded as a safe investment option
There are many classes of investment assets including stocks, bonds, investment alternatives, funds or even cash, property is still regarded as a safe investment option due to its lower volatility comparatively. If you invest correctly, it could also be an immediate source of return. That said, it would be wise to ensure that you have your property (being an actual tangible and physical asset) insured correctly.
- You can enjoy tax benefits
All of us have heard of negative gearing and we highly recommend that this is not your sole consideration in investing. The tax benefit is that many of the expenses relating to property can be written off during tax time. This includes property maintenance, council rates, and mots of all your property management fees!
As with any investment, professionals are trained to ensure that your asset produces the best and optimal outcome for your personal financial plan.
With the overwhelming popularity of Do-It-Yourself (DIY) shows on TV, it is tempting to try managing your property yourself. If that is what you are thinking of, here are some important questions to ask yourself and evaluate whether it is worthwhile.
Q1: Do you know the right rental rates?
Setting the right rental rate is one of the trickiest conundrums that a property owner faces. Price too high and you will have elevated rental rates. Price it too low and you will be losing valuable income which impacts your cash flow.
Furthermore, do you have the capacity to conduct regular rental reviews? A small increase of even as low as $10 per week can help you offset the ever-increasing property costs that will confront you (for example strata fees, utility bill increases, overheads, inflation, etc).
Question 2: Do you know how to advertise your property well?
Do you have an extensive ready network that you can advertise to? More than just putting up the property advertisement in search portals as well as social media, the way you position, right and market your property will ensure that you get the exact target audience to apply.
Have you made prepared your property for photography ensuring that the right angles and rooms are presented well? As the photos will be used over and over again, ensure that you get the best possible photography that represents your property in the best light possible.
Question 3: Can you recognise a potentially good tenant from an insidiously damaging one?
Having the skills to not only identify potentially good from the not-so-good tenants is critical. You can do this through interviews, reference checks, driving past their prior property as an indicator of how well the home is maintained, and conducting social media checks are just some of the screening techniques used by professionals.
Like a job interview, the selection process is absolutely important in vetting out the best possible tenant for your property.
Question 4: Are you apt at managing tenants and can afford the time?
On an operational basis, there are various inquiries to respond to as well as repairs required to be conducted efficiently. There are timeframes and procedures in which these matters raised need to be handled within the legal parameters of the lease.
Another aspect is to ensure that rents are always collected on time. Can you enforce a zero-tolerance policy on rent?
Question 5: Is your property and tenancy legally compliant?
Are you able to invest your time in ensuring that your property is legally compliant? How would you handle a tenancy dispute and what are the avenues to avoid legal action? Familiarising yourself with the changes in the regulations will ensure that your tenants and property are all well within the legal parameters of the lease.
Property management companies know the ins and outs of the law, which is something not to be taken lightly. Using the wrong type of tenancy form or not lodging the tenant’s bond correctly can result in the owner receiving a hefty fine, sometimes even up to $20,000. A reputable property manager will have a complete handle on what can and can’t be done, and what needs to be carried out when.
Question 6: Can you handle the maintenance and repair issues promptly?
How much time do you realistically have available to manage repair and maintenance issues? Do you want to be available 24/7 in case there’s an emergency repair required? Consider how a neglected to repair issue could turn into a hefty-priced one if not addressed promptly
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