Friday, March 16, 2007

Looking to invest? Now is the time!

The last few months has seen a huge rise in the demand for rental
properties. The January vacancy rate for the Adelaide metropolitan area sat
below 1% at an incredibly low 0.8% and from what our Property Management
team report, this hasn¹t eased at all throughout February. Consequently
investment properties are once again the flavour of the month!
If you're looking to buy an investment property, a report recently released
by Helen Collier-Kogtevs from Real Wealth Australia outlines a few tips on
how to avoid the key mistakes investors often make.
1. Falling in love with the property
If you inspect a property and care what the curtains look like, whether the
kitchen has stainless steel appliances and what the colour scheme is, you're
probably making this mistake. Many investors forget that purchasing an
investment property is for someone else to live in. You would be better
advised to speak to property managers about what features are desirable for
tenants in a given area, rather than thinking about what's desirable for
them.
2. Not seeking expert advice
Investors who sign on the dotted line without consulting their accountants,
solicitors or finance brokers are playing with fire. It is important to have
experts as a part of your team. Look at property investing as a business and
the experts are your employees. The benefit is that you pay them only when
you use them. It is also a good idea to ask these experts whether or not
they personally invest in property, to ensure their advice comes from
practical experience.
3. Not having a risk mitigation strategy
Many investors fail to ask themselves questions such as: what happens if the
property can¹t be tenanted or if the property burns down, and what if
interest rates go up or your circumstances change? As an investor you need
to establish a risk mitigation strategy, which is basically a back-up plan
for when things go wrong. Insurance, fixed interest rates & back-up savings
are all important aspects which need to be considered. When visiting your
accountant, ask if you can access your tax refund on a week-by-week basis,
which helps to aid your cash flow.
4. Not performing due diligence
Due diligence is the research done prior to making the purchase, it helps
the investor work out whether the property is a good buy or not. Some
factors often ignored include how far away schools, shopping centres,
medical facilities and transport are, what capital growth the area has seen
and what the vacancy rate is. It is a good idea to do your homework to be
sure that you are buying a great investment property.
5. Not crunching the numbers
Most investors rely on guesstimates rather than sitting down and doing the
hard numbers related to their purchases. If you're not great with numbers,
why not look at purchasing some property analysis software that helps do the
sums!
If you're looking to get into or are currently a part of the investment
market give us at Toop&Toop a call!
To view the full report go to www.realwealthaustralia.com.au
Karen Raffen, CEO

www.toop.com.au


© Toop Real Estate Group

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