With national rental vacancy rates the lowest they’ve been in ten years and the average gross rental yield at 3.3% nationally, it’s a good time to consider property investment in 2022. The affect of covid has lifted property prices in regional areas due to people escaping the overpopulated and expensive capital cities and taking advantage of new remote work arrangements. Prices are set to continue to rise over the next year with some predicted correction toward the end of 2023. Property investment in regional NSW continues to be a strong prospect with rental listings falling everywhere in the country.
So, if you’re keen to take advantage of these market conditions, what should you be looking out for when buying an investment property?
Where to buy
- Be familiar with the area you’re interested in. Research the suburb thoroughly.
- Look for the 3 magic markers – high growth, high rental yield and low vacancy rates. At the moment, that’s almost everywhere!
- Check local council websites for proposed planning changes that may influence your property prices in the future.
- Talk to the locals – real estate agents, neighbours, café owners and local businesses for the inside intel.
What to buy
- Apartments versus stand-alone homes – what will appeal to renters in the area? Eg. a house with lots of bedrooms might be good in a university town, a house with a large yard on a quiet street will attract families, an apartment close to the cbd will attract young professionals.
- Does the property have unique or attractive features such as views, a northern aspect, garage, close to transport?
- Engage a good building inspector and consider what the property will cost to maintain. Don’t forget to obtain a strata report so that you can be aware of any potential issues in apartment blocks.
- Consider whether making improvements in the property can increase capital growth and rental income.
What are the ongoing costs
- Insurances – building and landlord.
- Rates – council and water.
- Strata fees.
- Land tax (if applicable).
- Real estate property management fees (although this usually comes out of rental income and is tax deductible).
- Maintenance costs including any repairs required.
- Loan interest.
Buying and selling costs
- Pest and building reports.
- Conveyancing and legal fees.
- Stamp duty.
- Search fees.
- If selling – agent fees, advertising costs and legal fees and if the property has increased in value you may have to pay capital gains tax.
Protect your cash flow
As a medium to long term investment strategy, property investment usually becomes easier over time because you earn rent and receive associated tax benefits. It is critical however that you consider the costs of servicing the loan, maintaining the property and what will happen in instances where the property remains untenanted for any length of time.
Create a budget comparing all the outgoings with the potential income and work out what the real income is likely to be. It may not seem like much at least initially, but in the long term, considering the future sale of the property, it is a proven path to wealth.
Talk to a reputable Real Estate Agent
Once you’ve determined the geographical location of where you’d like to buy, reach out to a trusted real estate agent. To find one, look at the online Google reviews and check out agent comparison websites such as openagent.com.au or ratemyagent.com.au.
It’s important to also consider the reviews of the property management team so that once you’ve purchased your property, there is a strong team behind you as you move forward to have the property tenanted.
Here at Walkom Real Estate, we are proud of our team, offering full service in terms of sales, buying and property management. With the new year just around the corner, reach out now and set course for 2022 – we’re experts in property investment and we’ll have your back throughout the whole exciting experience.
Get in touch
If you’re interested in discussing investment properties, call our office today or start your property search now.