Important advice: When considering an investment property look at it with ‘investment eyes’ only.
Take a long term view
Take advantage of the cyclical booms that occur in property by planning to keep your investment for the long term. Be prepared for the highs and lows by making sure you have realistic financial goals and are comfortable with how much you are borrowing. Be prepared for changes to interest rates and increases to other expenses relative to your investment property including rates, insurances and management fees. It is also prudent to set up a ‘sinking fund’ for each investment property to cover repairs and maintenance that will inevitably arise in time.
Do your homework
Obtaining as much market information as possible about the property will help you make an objective decision. Research the capital growth history of the area and the potential rental income of the property (real estate agents and property research companies are a good starting point). Great Ocean Road Real Estate are very well placed to precisely advise as to exact yields and returns across all price ranges across the Surf Coast and hinterland.
The Lorne and surrounding township offer the flexibility to either holiday let or permanent rent your coastal property. Both are experiencing strong demand and offer a consistent yield. Feel free to contact Matthew our Accommodation Manager or Melissah our Permanent Property Manager if you wish to obtain a rental appraisal specific to your property.
Calculate your net return
The net return is the figure you need to know about in order to understand how your investment is travelling. A quick way to calculate it is to determine the gross rental return and then deduct approximately 20 per cent for outgoings such as maintenance, rates, management fees and insurance. While rents won’t rise quickly (but they will rise), the cost of the investment can fluctuate which does affect your net return. If your loan repayments, fees and other costs exceed your rental income you can negatively gear your investment property. This means that the net loss can be offset against other income you earn, reducing the amount of tax payable on your other income.
Make use of equity
You might feel reluctant to use the equity in your home to buy an investment property, but it can be an ideal ready-made ‘deposit’ that reduces your reliance on savings. You can use the equity in your home or another investment property to buy a property without having to find any cash, even for the costs associated with the purchase.
A good tip is to revalue your property every year so that you can use your additional equity to negotiate a larger loan that you can reinvest in another rental property. Great Ocean Road Real Estate is more than happy to assist with market appraisals to assist with this process and to assist with the professional management of your property. Please contact us at any time if we may be of service! See you on the coast…. even if it’s a little fresh at the moment!
Open Houses this weekend
Saturday 17th July
12:00pm – 12:30pm 16/3-9 Armytage Street, Lorne
12:00pm – 12:30pm 5/3-9 Armytage Street, Lorne
1:00pm – 1:30pm 14a Charles Street, Lorne
Michael Coutts
michael@greatoceanroadrealestate.com.au
0438 356 624
