5 ways to think like a property investor

From understanding the best strategies to successfully invest in real estate, to knowing how to choose the right property and how much rent to charge, there’s plenty of work behind the scenes that goes into becoming a property investor.

But perhaps the most important place to start is that it requires a very different approach than if you were looking for a home to live in. Plus, you need to have a list at the ready of what type of property is going to enable you to reap the benefits of investment. And here’s where we suggest you begin.

Location, location, location

Always consider location first. It’s absolutely one of the most crucial aspects of choosing a property investment. And remember that it’s not necessarily where you want to live, but a location which will give you the potential to find great tenants and achieve a good rental return.

So look at proximity to public transport, schools, central business districts etc. You may also find that neighbouring suburbs are a solid option as an ‘up and coming’ location.

Beauty is in the eye of the beholder

Don’t dismiss a property that needs a little work, especially if it’s only cosmetic. There’s a common adage in property investment that you make your money when you buy a property, not when you sell. And it basically means that the price you pay today will play a major role in the profit you gain later on – it’s about buying well in the market so that it increases in value over time.

And instant value can be achieved by buying a ‘fixer upper’ and turning it into something more liveable. Most people can’t be bothered with the hard yards that come with that, but if you can put in the effort, you’re likely to be rewarded for it.

Do your due diligence

There’s a lot of number crunching to do when you’re a property investor. It’s about drilling down across a whole range of numbers, like rental return and management costs, interest and mortgage rates, gross and net rental yield, cash flow and capital growth return.

You also need to understand your reasons for getting into property investment. Look at your borrowing power, be honest about your risk tolerance and know the financial goals you’re looking to achieve. Do you want to be an active or passive investor?

Interior and exterior appeal

Of course a property isn’t just numbers on paper, it’s a physical asset that has the potential to provide you with extra income and future capital for retirement. So consider things such as the property’s features – the number of bedrooms and bathrooms – as well as local amenities.

There are many things that can contribute to its appeal to tenants, and the rent they will be prepared to pay. Yes, some aspects you can control, like installing air conditioning and modern appliances, but you can’t change its views, street parking or outdoor living space. Put yourselves in the shoes of a prospective tenant and consider the pros and cons of the property, just as they would.

Talk to the Neutral Bay experts

The good news is, your property investment journey doesn’t have to be travelled alone. Here at Home Property Agents, we not only help people to buy and sell property, but we also manage rentals and provide access to other professionals.

If you’re looking at property in Neutral Bay and surrounds, you can trust we have the right knowledge to assist – we’re locals who have been in business for 30 years.