Not only am I the director of a firm whose buyer’s agents and property managers handle a lot of investment properties in Perth, but I am an investor myself. I am successful now, but I learned a lot of lessons the hard way as I took a beating in my early years as an investor.
Since those early days, I have seen a lot of investors succeed and I have seen some fail. In nearly every case, those who fail make the same mistake I did as a new investor; they fail to treat their investments like a business. They may think they are, but any investor who fails to execute these simple fundamentals will only succeed by accident, and many will fail.
When we say, “Treat it like a business,” what do we mean? We mean just that. And one of the first lessons to be learned is to not do everything yourself. In some cases, you are going to do your own research and legwork, but in others you are going to hire professionals and let them do their jobs.
At the very least, you will need to assemble a team which includes a buyer’s agent, a property manager, a finance broker and an accountant. Here are 5 essential things that we recommend to our clients to protect their investment property in the Perth market.
Get Appraisals Once a Year
Have your investment property appraised for both rental and sales prices at least once a year. Even a historically solid market like Perth fluctuates; it is essential that you know how much money you should be charging for rent and the market value for your property, which affects your equity.
Keep an Eye on Price Trends
Not only do you need to know what your property is worth now, you need to know what it will likely be worth in another year. You also need to know what the market is doing in your preferred investing area. You may consider a price prediction tool or you may want to talk to agents in the area. Some things to consider: number of properties for sale in your market, how long they are staying on the market before sale, and the selling prices compared with asking prices.
Hire a Professional Property Manager
As a beginning investor, I tried to manage my own property. It didn’t turn out well and it probably won’t for you, either. Your property manager will protect your investment by making sure that your property is rented, rents are paid on time, and maintenance is being followed. They are well worth the price you will pay.
Talk to your finance broker at least once a year and make sure that you are not paying too much interest and that your loans are structured in such a way that they will not restrict what you do with your home and your next investment property purchase. This can save you thousands of dollars.
Be sure to talk to your accountant and review deductions and tax planning at least twice a year. The best times are the beginning and halfway through the financial year. This gives you time to adapt to changes in your situation.
Adding It All Up
It is essential that you treat real estate investing as a serious business. I guarantee you that your competition is. If you don’t take care of your investments, they won’t take care of you.
Jarrad Mahon is the director of Sales, Property Management and Strategy at Investors Edge Real Estate. His renowned, “Property Success Plan” has helped numerous investors succeed in the Perth real estate market. For more information, call 1300 472 427 or visit their website: https://www.investorsedge.com.au/.