Congratulations on buying your investment property! You’ve made a huge step and can now officially call yourself a property investor. But what comes next?
For many, purchasing the property feels like the big end goal, but in reality, this is just the beginning. Now that you own an investment property, there are several key things you’ll need to do to maximize your returns and manage your new asset effectively.
Find a Good Property Manager
One of the most important steps after buying an investment property is finding a reliable property manager. While some investors choose to manage the property themselves, it can be risky and time-consuming.
A good property manager will help secure tenants, handle maintenance, and ensure the property runs smoothly. They’ll also take care of tasks like collecting rental income, conducting inspections, and organizing repairs.
When choosing a property manager, compare fees and services. Some real estate agencies have a dedicated property management department, while others might treat it as a secondary service. Make sure to meet potential managers in person and ask about their experience managing rental properties.
Revise Your Strategy and Plan Forward
Now that you’ve made your first purchase, it’s time to think about your long-term investment strategy. Whether you want to grow your property portfolio or increase your rental yields, having a clear plan is crucial.
What do you want to achieve from this property? Do you plan to buy more properties in the future?
If you’re unsure where to start, a financial advisor can help you devise a plan based on your current financial situation and investment loan. They can also guide you in setting short-term goals to keep you on track.
Stay Educated About Property Investment
Owning an investment property doesn’t mean you can sit back and let the returns roll in. It’s important to stay informed about the property market and your investment.
Keeping up with property trends will help you spot new opportunities and ensure your property is performing as expected.
You can educate yourself by reading property investment books, attending seminars, or keeping up with news from reliable property websites. Speaking with other property investors and professionals can also help expand your knowledge.
Tax Implications and Property Depreciation
Owning an investment property introduces new tax considerations, such as capital gains tax and tax depreciation deductions. One of the biggest tax benefits for investors is the ability to claim depreciation on the property. This covers wear and tear over time, which you can deduct during tax season.
To maximize these deductions, you should get a tax depreciation schedule prepared by a quantity surveyor. This schedule outlines how much depreciation you can claim on your property and ensures you don’t miss out on valuable tax breaks.
Get Landlord Insurance
General home insurance doesn’t cover the risks that come with renting out your property. That’s why you’ll need landlord insurance, which covers potential issues like tenant damage, rent arrears, or legal costs. Landlord insurance is a critical part of protecting your investment from unexpected problems.
Shop around and compare different policies to find the one that provides the best coverage for your needs. Remember, the cost of landlord insurance is tax-deductible.
Renovations to Attract Tenants
Before renting out your property, consider whether any renovations are necessary to make it more appealing to tenants. Even minor improvements like fresh paint, new appliances, or updated flooring can make a big difference in attracting quality tenants and potentially securing a higher rental income.
While you may not need to do major updates, these small changes can help position your property competitively in the rental market. Plus, many of these costs can be claimed as tax deductions.
Update Your Budget and Plan for Expenses
Owning an investment property involves ongoing costs. From maintenance costs to unexpected repairs, it’s important to stay on top of your budget.
In the first few years, your rental income might not cover all your expenses, so you’ll need to account for potential shortfalls.
Keep a cash reserve for emergencies, and track all income and expenses carefully. This will help you stay organized and ensure you’re ready for any financial surprises that may arise as you manage your property.
Conclusion
Buying an investment property is just the start of your journey as a property investor. From finding a property manager to understanding tax implications, there’s plenty to think about after making the purchase.
By staying informed, protecting your investment with insurance, and keeping a close eye on your finances, you’ll be well on your way to success.
Frequently Asked Questions on Investment Property
When should you let go of an investment property?
If your property is in a stagnant or declining market, it may be time to consider selling. Other signs include reaching retirement or working part-time, having a negatively geared property with no growth potential, or finding more attractive investment opportunities.
How can I increase the value of my investment property?
To boost the value of your investment property, focus on buying in a good suburb and understanding your target market. Consider strategic renovations, property developments, and keeping the property well-maintained. Highlight the property’s best features but avoid overcapitalizing on improvements.
What is the oldest age you should buy a house?
There’s no maximum age to buy a house. Whether you’re 40 or 90, lenders view your mortgage application the same way. As long as you meet the financial requirements, your age isn’t a barrier to getting a mortgage.
What is the right age to start investing?
There’s no fixed age to start investing, but starting early is highly beneficial. The sooner you invest, the more time you have to grow your returns through long-term compounding. Even minors can invest, setting themselves up for better returns in the future.
