What to know before becoming a 'rentvestor'

What to know before becoming a 'rentvestor'

 

Renting where you want to live, whilst leaping into investment property can be a clever way to make money in real estate, says RMA CEO Andrew Graham.

"I’ve seen this achieved many times by savvy buyers who want to move up the property ladder and save a solid deposit for their own home," he says. "With interest rates at historic lows, it's a great time to identify a growth location, purchase a property (like a one-bedroom apartment), and rent it out for negative gearing benefits. You can even modernise it with a mini-renovation and sell when there's an uplift in the market."

 

Looking to make leaps and bounds in property and sure up your future financial growth?

 

Here's what you need to know about becoming a 'rentvestor'.

 

1. Cash Flow

It's crucial to ensure you have the substantial cash flow to cover all associated costs with being a landlord. Factor into your budget any shortfall between rental income and home loan repayments, landlord insurance, council rates, strata fees if applicable, water rates, and funds for unexpected repairs and maintenance.

 

2. Wear, tear & repairs

Upkeep or repairs made to your investment property are tax-deductible and an opportunity to refresh the property, which in turn, can increase its value. Keeping up with maintenance, from small leaks and broken drawers to significant plumbing and electrical issues, will keep a valued tenant happy too.

 

2.  Lighten, brighten & modernise

Prepare your property for a high return on your investment and potentially increasing its value. Minor inside tweaks can be less costly than an exterior overhaul and will still increase your odds of fetching a good selling price in the future. Consider replacing old light fittings with statement ones, swap out hardware, refresh kitchen cabinets and bathroom vanity, and give interior spaces a fresh lick of paint. Beware the wrong colour palette can weigh down an entire space, whilst a neutral scheme reflects light making it appear more spacious.

 

3. Bring in a professional

Engage a reputable property management agency to look after your investment. Not only will it relieve you of time and stress, but will help maximise your return on investment. "A good property manager has an excellent understanding of the market, including all the current laws and legislation," says Andrew. "When it comes to maintenance, they can ensure quality contractors are selected, offering economies of scale to ensure costs are reasonable."

 

A reputable property management agency is also invaluable when it comes to finding your perfect tenant. "They have the marketing knowledge to help you narrow down an excellent selection of candidates, choose your ideal tenant, and moving forward, collect rents, complete paperwork, and undertake inspections to ensure your property is looked after," he says. "They also offer mediation between owners and tenants for a third-party perspective with an understanding of the laws and legislation. It's money well spent."

 

4. Now sit back, be patient, and wait...

You may not see benefits straight away but take a long view.  In time, your property should rise in value, improvements will increase the potential of higher rental income, and the impact on your future finances will be worth celebrating. You need to be confident in the market – real estate is long term - it’s all relative to the price you paid.