7 tips for successful real estate investing
Many people think being a landlord is an easy way to make money. It can be financially rewarding, but easy it is not.
Research the area where you’d like to buy. Is it in decline or on the way up? A good indication is if chains like Woolworths, McDonalds or Coles are moving in. These companies do a lot of work on demographics and income before deciding where to locate. You can get a big picture look at vacancy rates by researching on sites that helps immigrants with information and resources to settle in Australia.
Use a real estate agent who also is an area investor. Ask them to show you their properties and the rents. Ask for the names of other investors they have helped. Call them. Make sure they have a team of professionals you can use, such as property managers, insurance advisers, mortgage brokers, home inspectors, lawyers and of course, accountant.
Do not be in a hurry to rent a vacant unit. Take your time to qualify any potential tenant, since it can take months to evict a problem tenant. Call all tenant references, ask for a current pay slip and speak to at least two prior landlords. Where possible, require the tenant to pay for utilities. The tenant will have to apply to the utility company for an account, which amounts to an extra credit check being done by the utility company.
Buy and hold your property for the long term. This way, you have an income and slowly start to pay down your mortgage.
If you are investing with others, have a partnership agreement. Problems may occur later if the friendship breaks down, especially if one partner loses their job and cannot pay their share of expenses, or if one partner wants to sell while the other does not. With a partnership agreement, you can provide what will happen in these situations in advance, without having to pay costly legal fees to figure it out later.
Investing in real estate is not easy. But by taking the proper precautions and with the proper financial advice, it can be very rewarding.