Investing in Your Future: The Benefits of Buying an Apartment
There are many ways to invest and grow money. Rental properties are one of the most reliable of them all. Although property values can rise and fall with the economy, rental incomes remain a fairly steady source of income. And what’s more, if a property is well-located, beautifully maintained and leased to consistently paying tenants, it can have great resale value, as well.
Buying a rental property and being a landlord requires thoughtful planning and a commitment to your investment. Here are some important things you’ll need to know as you embark on your new undertaking.
Why Investing in an Apartment Building Has Its Advantages
More and more people are moving to urban areas. In the interest of culture, convenience and walkable or bike-able, commutes, cities are more attractive than ever. The desire, in a busy world, to relinquish maintenance costs and responsibilities and to downsize to a simpler lifestyle also top the list when it comes to apartment-dwelling demand.
As a result, city domiciles are becoming expensive, and many popular urban neighbourhoods are filled near capacity. A rental property in an established city, though it requires a lot of upstart funding, can be a good investment.
Similarly, many suburbs are becoming more like cities, housing denser populations as nearby cities overflow. Busy, walkable downtowns are developing or being improved. Public transportation is being looked at seriously and new apartment buildings and developments are appearing. The suburbs can be a great place to start for a lower entry investment and can yield great rental returns.
There are also inherent tax savings in the rental property business. The following expenses are tax deductible:
- Management and maintenance
- Interest on loans
- Borrowing expenses
- Capital works spending
It’s imperative that income and expense records be kept from the start. Employing the services of an experienced and trusted management company, particularly one that’s well versed in your locale and property type, can make taking advantage of tax savings easier. An ATO compliant accounting software program is useful, as well.
Why You Need a Dedicated Property Manager in Your Corner
Long before you make a purchase and financing decisions, you’ll want to view, inspect and research properties with a local real estate professional. Don’t go this alone, particularly if you are new to the income property buying experience. It’s true that many realtors can show you properties, but no one will understand the rental market business better than a local company that deals with it exclusively.
In addition to providing many expert services, your property management company can provide you with all kinds of useful rental information, tips and facts for landlords in the Northern Territory. Below are just a few of the steps involved in the rental income property buying process.
- Determine how much you’ll need to spend and be able to borrow.
- Research and compare loans.
- Go property shopping with a recommended agent.
- Choose a property to purchase.
- Read your copy of the contract of sale carefully.
- Have your conveyancer or solicitor review the contract of sale, too.
- Make an offer.
- If the seller accepts it, you will be required to put down a deposit.
- Sign contracts, but only after your conveyancer or lawyer has read them over.
- Settlement occurs and you are the proud owner of a property!
Why You Should Consider Buying a Property That’s New
Buying a fixer-upper can save costs at purchase time. It can also be a wonderful, creative challenge as well as an opportunity to get into a high-demand area at a discounted price. Keep in mind, though, that the fixer-up process isn’t easy. Among other things, these types of repairs and updates can be an expensive undertaking:
- Rodent or bug infestations
- Long term wear and tear
New properties can be easier to enter in to, and expensive work can be avoidable for years. Traditionally, clean, bright, brand new properties are more likely to be kept that way by tenants, too. Tenants who respect your property, and your management, add value.
Why You Should Consider Many Options to Fund Your Investment Property
There are many different types of home loans, including a helpful loan for those who are newly entering this business. They’re called interest-only loans. Ask about these, but also compare them to loans where you pay the principal off over time, as opposed to in a balloon type format.
Shop around. Get advice from your property management company or a mortgage broker. Below are links that may help:
Loan Comparison Sites
Helpful Mortgage Calculators
Why You Should Be Creative and Educated When Deciding Where to Invest
There are great deals to be found in ‘up-and-coming’ areas. If you can secure the funding, an older, established, popular neighbourhood can be more reliable. Look to the suburbs, especially ones that are growing quickly, or ones that are due to become homes of relocating businesses, cultural and sports venues or university campuses.
Research statistics on vacancy rates. A high vacancy area may be a more budget-friendly investment up front, but less able to attract rental income. On the other hand, if a high-vacancy area is experiencing growth-promoting zoning changes, infrastructure improvements or if a large company may be locating there, this could be a brilliant choice.
Try to invest in areas that you’re familiar and comfortable with or enlist in the help of a local real estate rental specialist. Always do your homework. By taking your time and keeping informed every step of the way, you will end up with a lucrative property investment you'll be proud of and glad you made.