Australians love affair with bricks and mortar continues to grow. With a plethora of lifestyle shows promoting the benefits of owning and renovating your own home no wonder people feel the desire to enter the property market.
Real estate bodies nationally are discovering that while home ownership remains a great Australian dream, many people stay with property when there is spare cash or equity to invest.
“While the term ‘property investor’ conjures visions of an individual with a broad property portfolio, it actually applies to many of us,” Real Estate Institute of Victoria CEO Enzo Raimondo says. “According to the Real Estate Institute of Australia, the latest taxation statistics show 14.9 per cent of taxpayers are investors in the residential property market.
“The majority of those are ordinary ‘mums and dads’ with only one investment property.”
Latest statistics from 2010-11 show 73 per cent of investors had only one property, but there has been substantial growth in the past five years.
“For most of us negative gearing, which enables investors to claim a tax deduction for expenses on an investment property, provides an opportunity, and incentive, to invest. “However, it’s important to remember that the same principles apply when buying an investment property as when buying your own home.”
Mr Raimondo says some principles when buying property to live in also apply for investment purchases, but rental properties can come with comprises.
“After deciding on preferred locations and whether to buy a house or apartment, start by checking out median prices in those areas. Consult your bank, draw up your budget and be clear about your maximum price. There are many great properties out there, do not be tempted to exceed your maximum if you find ‘the right’ one,” he says.
During research, make a list of features you must have and those on which you would compromise.
“Remember: this is a rental; those criteria may be very different from those for your home. For example, you may be willing to spend time on a high maintenance, hard-to-clean home, but a rental property should be hard wearing and easy to maintain,” Mr Raimondo says. “Think about what would make your property attractive to tenants. For example, you may enjoy driving to work, but rental property proximity to public transport is essential. If buying a family home to rent out, is it near schools? If buying a trendy apartment, tenants will want cafes nearby.”
When on the investment property trail, it’s important to put aside emotion.
“When buying your home you are looking for ‘the one’. But you don’t have to love your investment property – it needs to meet a particular purpose, and do that job well.”