When starting out an investment portfolio, there are a few key considerations to making it a long-term success.
Among your checklist should be finding the right neighborhood and the right building so that you will receive a steady rental income from reliable tenants and that you will see your asset appreciate in value.
And you can start off with something as modest as a small apartment or condo.
Whether you’re buying your first property or your 30th, what does matter is that you have done your homework.
Property markets change constantly, and so do the needs of prospective tenants. For example, in the past couple of years that we have been living with the Covid pandemic, there has been a rise in demand for home offices, fast internet connections and even access that minimizes mixing with other tenants.
As we return to normality, folks still want workspaces in their rental property and easy access for safe delivery of groceries and Amazon purchases.
Of course, the age-old needs remain for local job opportunities, transport connections, schools, and amenities like cafes and bars.
If you’re about to invest, consider the items on this checklist:
Local supply
Gather details about the rental market in the area you want to buy. What is the vacancy rate? Are tenants lined up to move in? Will a new apartment block around the corner significantly over-supply the existing market?
Avoid fixer-uppers
They’re a cheap way into the property market for a reason. As an investor, you don’t want to pay out constantly in response to tenant complaints. Much better to find a good quality house or apartment that will give you the minimum hassle.
Quick upgrade
However, there’s nothing wrong with a property that needs a little love, as it will pay you back in the medium to long-term. It’s easy and inexpensive to achieve a makeover with a fresh coat of paint and new floor coverings. Adding new cabinet doors to the kitchen and bathroom is an affordable upgrade, too.
Danger signs
When walking through a property, watch for how it has been maintained. If you’re checking out an apartment in a small block, is there trash on the sidewalk or around the property? Is the fencing in good condition? Is the entryway neat and tidy?
Street-wise
Are you buying onto a noisy street, or where boy-racers come out at night and rev their cars? Can you see folks loitering? Does it feel safe? These are questions that prospective tenants will ask.
Get the scoop
If possible, ask neighbors about the area. Look for local news reports for anything worrying. You can also check the area’s demographics so you know what type of renter you are likely to attract. Is it an ageing population, are there lots of families or is this a spot that attracts young, single people? These details should help inform the type of property you buy.