Buying an investment property vs. a personal residence
When you're looking into purchasing a property that adds value to your portfolio over time, there are some different considerations that you have to make compared to buying a personal residence.
Rental yield, self-sufficiency and attraction of potential tenants are all options that need to be taken into account when making a move for an investment property, whereas there are different considerations when buying a residence for yourself. A buyer's agent from Cohen Handler can help you to make the right selection, even if you're buying a home to live in yourself.
What is important to grow my portfolio?
The property market is a much more secure way to invest your money than stocks and shares because of how unaffected real estate is to instantaneous fluctuations in the economy.
Taking into account exactly what tenants are after means that your potential pool of candidates will grow.
However, the expenditure is often much higher on property than when investing in shares, so ensuring that the choices you are making are the right ones can help you to grow your portfolio effectively. Benefiting from a strong rental yield gives the potential for a property to be totally self-sufficient. What that means is that any maintenance or mortgage repayments that need to be made can be met by payments from renters. There will therefore not be any additional outlay of capital from the home owner.
In terms of attracting a tenant to your property, taking into account exactly what they are after means that your potential pool of possible candidates will grow. A bigger pool of candidates means more chance of always having a tenanted property.
The Optus Renter of the Future survey from McCrindle found that tenants in Australia valued parking spaces as the most common factor in choosing a property. In fact 38 per cent of those surveyed, so you can be sure that investing in a property that has ample and secure parking will widen the scope of your tenant search.
Technology is key as well. A quarter of participants in the survey said that having a strong mobile signal is important to them in finding the right rental. What's more, 31 per cent of people said that a strong and fast internet connection was necessary to applying for a property. The new National Broadband Network (nbn) is being rolled out around Victoria, and so investors looking at real estate around the state should check that the nbn will reach their tenants.
Employing a property agent when making the decision to invest in real estate can make choosing the right house or apartment easy. The specialists can take all of your specifications and pick out properties that would work for you, including all of the technical aspects that renters look out for. The ability to keep a pet is also important.
The Australian Veterinary Association (AVA) estimated that in 2013 there were 25 million pets in Australia. The country has one of the highest rates of ownership in the world, with 63 per cent of households owning pets. Further noted by the AVA is the fact that just under 50 per cent of Australian households wanted to either get a first pet or get an additional one, which shows just how popular they are. Thus, opening your rental property to pet ownership could make your rental the hottest in town.
And what about for my own home?
As a property buyer looking for your own next residence, as opposed to an investment, there are a few things that you can change regarding your wants and needs.
Where an investment should have great access to parking, you might not require any for your own property. In one of Sydney's most populated suburbs during 2011 for example, Redfern Park, 65.8 per cent of its populace did not own a car according to atlas.id. If you fit in a similar boat, then parking will not be high on your agenda.
The same goes for pet ownership. You might have no intention of getting a pet, which means requiring a pet-friendly property is not going to be necessary for you.
What a private residence will need however, is great internet and a strong mobile signal, much like in an investment property for rental. Living there, security will also be valuable and so a property that can be locked up safely and quickly would be more attractive. Installing personal alarm systems can help when you have purchased the property, and the Australian Security Industry Association Limited (ASIAL) reported that in 2012-13, Australians spent $2.4 billion on security, including hardware, electronics and monitoring. A security system can provide some comfort, but living in a home that is easily secured and away from busy roads could give the extra peace of mind required.
The specialists at Cohen Handler can put you in the right suburb for all of your needs, ranging from parking to fast internet to a great community feel. Get in touch and make your next property purchase the right one.