Many people are interested in diversifying their investment portfolio through real estate. Many landlords who invested wisely have developed a rewarding property portfolio even after significant trials and hardships. For those who can successfully navigate the intricacies of the rental market, it is a smart way to multiply their investments through areas typically regarded as a ‘safe’ investment. The slump in buying houses combined with the strong trend towards renting favours savvy investors who wish to become landlords. In Australia and particularly in Melbourne, wages have not kept up with the rising cost of housing, shifting the housing style of Victorians towards renting their home rather than buying it outright.
While typically regarded as a safer investment than shares or commercial investments, the property market does still have a number of risks involved in the process. However, if you are careful to heed a few key areas and follow the listed pointers, you will be more likely to succeed in your foray into the rental market.
Treat this as a business – Be professional from the start and just don’t focus on buying or collecting any old house. Choose the property with care, paying attention to the level of return you will receive for that specific building. Tenants belong to a diverse range of backgrounds – singles, married, large or small families. Buy property that will suit your target group of tenants and desired portfolio. If your desired tenant is a small family with kids, focus on properties nearby schools in a quiet, decent, crime-free location. Financially, you should estimate the expected cost of your property and your down payment, before calculating the rental required to cover at least the mortgage on your new property. This will lead to additional reserves you can dip into for funding for further investments.
Choose the location with care – Buy in neighbourhoods that you are familiar with, ideally close to your home which will help you monitor your assets more efficiently. You might get a home at rock bottom prices, but if it is in a location that people would not want to live in, it will ultimately become a drain and a dead investment. This might be for a variety of reasons – lack of schools, poor transport facilities or being a crime-prone area. For this reason, experts recommend not buying property outside your state until you can afford to hire the appropriate agencies to look after it. Or you might even contact companies specialising in labour hire in Melbourne to get you required experts in the supervision of rental properties.
Maintain your property well – At the heart of good rental income is happy tenants. A high turnover of tenants increases your expenditure, as you incur advertising and cleaning costs every time a tenant moves out. Hence, maintain your property well and focus on providing tenants with the necessary fittings or gadgets for their demographic. The best tactic is to find good tenants from the very beginning. To ensure you receive the right tenant for your needs, there are specialised companies that will run background checks on prospective applicants. Not only does this help you to establish their authenticity it will help you decide whether you can trust them and want to establish a long-term agreement.
Always keep these aspects in mind when researching whether a rental investment portfolio is right for you. Ultimately becoming a landlord is a rewarding and exciting prospect that if you approach correctly can have significant benefits for most people.