Taking the leap and diving into real estate can be both exciting and overwhelming. As one of the most preferred ways in Australia to invest, a handsome portfolio in real estate can propel you towards achieving greater financial gains and a secure future. Contrary to what many people assume, you don’t need to be a high-income earning, business magnate to make profitable investment choices, in fact, many landlords are only slightly above or below the median salary. All you need is a bit of good, practical advice and to be aware of these four rules.
1. Don’t Underestimate Commercial Real-Estate
There are investors who evangelize residential real estate as the safest way to go, and then there are the commercial property preachers who’ll emphasize the security of cash-flow makes their preference the easy-winner. The truth is, you should consider investing in commercial real estate as well as residential. Just avoid waiting too long to expand your portfolio because it will cost you!
A commercial property will bear you longer and more secure leases, a smaller deposit, fewer rates to pay (your tenants will cover them) and on average, a much higher return on investment than residential! Finding the right tenant can take a bit longer than in residential real estate, but it is very much worth the reward once you’ve found them.
2. Location Is King
It goes without saying that the location of your property is important, but this really needs to be a deciding factor of all real estate choices you make. Do not choose your investment purely on tax deductions, grants, or loans you can get out of them, as terms and conditions may change and you could be left with something you can’t afford to keep. Focus on finding the right property type for your strategy, ideally in an undervalued location or somewhere that is emerging or in development. A bit of location research before you buy can ward off a lot of unnecessary surprises later on.
3. DIY – But Only What You Can
Save money on hiring tradespeople by taking care of some of your home improvement work yourself. You’d be surprised by how much people pay for something as simple as a paint job. Before you slap on your overalls, you need to know your limits so you don’t take on more than you can handle, or worse; cause damage that costs more than the task you’d set out to do! Unless you really know what you’re doing, things like plumbing and electrical tasks are best left to the professionals.
4. Treat It Like A Business
No matter how big or small your first property or growth expectations are, you must treat real estate investing as a business if you expect to turn a profit. You want to limit losses as much as possible and have a team you can rely on, so take great care in choosing your property manager, advisors, maintenance team etc. Aim to attract quality, blue-chip tenants as they are the equivalent of your customers. It’s best not to get too emotionally invested in your real estate so you can always choose what is best for your business.
These are just a few quick tips to help you get started on the right track. Be sure to expand on each point further with some research so you can make well-informed decisions and build a diverse portfolio that reaps you fruitful returns!