Property investment can be incredibly rewarding, both financially and personally. We have seen many landlords who strive to experience these rewards, but struggle with their first investments. Whether it was a question of finding a property that they can afford, or one that would give a reasonable rental yield, first time property investors are often challenged by that first step into the market. Here are some solutions to the challenges that often face property investors.
Consider Who Will Pay The Rent
Knowing who your ideal tenants would be will help inform what sort of investment property you want to buy. Some like renting to families due to the reduced likelihood of tenant changes. Other landlords prefer to rent to groups of young people because multiple incomes often mean a higher rent that can be charged.
If you want to rent out to families, consider the schools that the property is in zone for. If you are looking to rent out to young professionals, think about proximity to town or possible transport and off-street parking. Different areas and types of property will be attractive to different types of tenants. Keeping this idea in mind will help inform you of what sort of property you should invest in.
At Rotorua Rentals, we can help to choose your tenants from our extensive tenant pool that we have on file. If you like, you can let us know specifically what sort of tenants you do or don’t want as well.
Look Out For Traps
From neighbourhood crime rates to unrealistic rental expectations, property investment always has an element of risk associated with it.
Purchasing an investment property in a rougher area can often come with more issues than benefits, even if it’s the nicest house on the street. These properties may seem like good value on the face of it, but will often have higher maintenance costs. This can be due to factors such as damage or break-ins. You will also have to rent them out for a lower value, as there is less demand to live in high crime areas. Make sure to consider the ongoing maintenance costs as well as the income from renting, especially when investing in these neighborhoods. It’s important to get a good idea of what to look for in an investment property (and what not to look for) before you start considering specific options.
Additionally, unrealistic rental appraisals from realtors can result in overly optimistic expectations. You might purchase property with the intention of renting, only to discover that market-rent is significantly lower than you were led to believe. Remember, the real estate agent’s job is to sell the house. It is not to give you sound investment advice. That is just one of the reasons why it’s important to get an independent rental appraisal. At Rotorua Rentals, we offer free rental appraisals if you are considering investing in a particular property. Our property management experts are always up to date with the market, and can consider all the factors to give you an accurate estimate.
Make Sure Your Rental Is Filled
Getting filling your property at a high enough rent is a challenge that many new landlords and property investors struggle with. Many first-time landlords tend to over-charge for their rental. This is often because they base the rent on what they’ve been told by the previous owner or the agent selling them the property. Another reason is because they would rather the property sit empty for a while rather than reduce the rent by $10-$15 per week.
Here’s some food for thought: Consider a property that is being advertised at $520 per week, and a similar property being advertised at $510 per week. The slightly cheaper property is obviously likely to be filled sooner. Even if the more expensive property is filled just one week later than the cheaper property, it will mean one full year of renting before it earns the same amount.
At Rotorua Rentals, we strongly recommend getting in touch with Rotorua Rentals if you are considering investing in a property. We have been Rotorua’s property management specialists since 1993, and have a wealth of knowledge and expertise. We are also independent and impartial, so you can trust the advice that we give. Purchasing property is a big investment, and if you intend to rent the property out, you need to be making informed decisions. Contact us for a free rental appraisal today!
