While stocks and bonds have their own following, it’s the real estate that’s pulling in a heightened number of keen investors for quite some time now. In fact, according to an esteemed report published by CNBC, real estate is increasingly being considered as the best investment option among smart investors.
Are you too aspiring to try your hands in the Aussie real estate scene? Thanks to the amazing ROI, property investment is a sort of national pastime for Australians presently and it would be wise to follow suit. Millennials today are an enterprising generation, always looking forward to make the most of life and resources. Investment in real estate surely marks a smart step forward for them.
However, whether you are eyeing a great rental yield or need the best commercial space for your new venture, real estate investment carries its fair share of complicacies. But, nothing to sweat. The post below has come up with the most helpful and practical guide for real estate investment for beginners.
1. Passive or active
Before you set out, decide on the investment strategy. Give a thought about the effort, time and money you can afford to put in the property. Would you be able to stay consistent with the property management? Yes, you can always appoint a property manager but a rambling house would demand your active involvement frequently.
In simple words, if you can afford constant upkeep, you can certainly go for the big rambling property. But if you can’t, consider passive investment on a simpler low-maintenance space. Hire a good property manager to take care of the apartment.
2. Consult a reliable mortgage lender
You can’t decide on your property without a clear knowledge of financing support. 3 in 4 real estate investors seek mortgage help while buying a property and it’s the most practical step when you are confident of your payment abilities.
So, consult a reliable mortgage lender beforehand to have an idea of your financing eligibility for the investment- based on your present financial status, assets, liabilities, job and income. It will enable you to filter out the most compatible listings as per your suitable price range.
3. Be mindful of the location
When you are looking forward to a superior rental yield with your investment property, be mindful of the location. Study the current market.
Also, talk to your realtor to find out the areas with best possible rental growth in coming months. According to internationally acclaimed real estate services & investment advisory firm CBRE- it’s the south-eastern part of the country that’s likely to produce the maximum rental growth & highest ROI this year.
The company has pinned high hopes on Sydney for the strongest growth in 2017. Other potential regions are Melbourne and Brisbane. Stress on well-connected areas that promise easy access to necessary amenities like public transport, schools, entertainment centers, hospitals and so on.
4. The smart 1% rule
This is one of the basic tips for real estate investment. When you are aspiring for healthy rental yield, keep in mind the famous 1% rule. According to the rule, your investment property should be able to generate at least 1 percent of the money you will pay for that each month. If it’s less than one, look for another property.
5. Contact a realtor
Real estate investment is a complex process any day. We, the laymen, are not usually up-close with the elaborate market research, property investigation or the enormous paperwork involved here.
Thus, it’s best to rest the job with the pros and a seasoned real estate agent would be your best buddy for the job.
However, don’t just settle with the first realtor you come across. Get a shortlist of at least 4-5potential names before you finalize “the” one. Your chosen one must boast a grand reputation in the industry, with listings for any specification and budget.
6. Are you aware of the taxes?
The Australian government charges stamp duty on most of the property purchases in the country. You would need to pay something like 2 to 3 percent of buying price upfront as the stamp duty- and hence you must make the financial arrangements accordingly beforehand.
It’s to stress here that the property taxes in Australia have doubled up for foreign investors of late.
Besides, you must also know about annual land tax that the government imposes when the property holdings get more substantial. The amount might vary from one State to another- so check the details with your State beforehand.
Winding up
No one said real estate investment would be easy. But then, it’s no rocket science as well. The onus is on you to be watchful about your steps and educate yourself about the market and the process. And of course, get smarter with the finances to leverage your eligibility for the mortgage to strike a killer deal.
