Rule 1: One or two properties will not secure your future
Rule 2: Properties must be easy to hold
Rule 3: Get the right property for the right area
Rule 4: Don’t make decisions from your heart – you will never live there
Rule 5: Doing things yourself costs more than you think
Rule 6: Avoid student accommodation and serviced apartments
Rule 7: New properties are easier to cash flow
Rule 8: Try to get a variety of positive and Negative Geared Properties
Learn the 8 rules that reduce risk and boost the performance of your investment property.
Do you want to know how to choose the best property for investing? Not sure how to get started? OJ Pippin Homes has made choosing the best properties user friendly with these eight investment property rules that will reduce your risk and increase your profitability.
Rule 1: One or two properties will not secure your future.
How many properties does it take to secure your future? It depends on your income goals, the value of the properties, and how hard your money is working for you. When you first start out as an investor, you really need to look at your loan to value ratio. Ideally, you want to find a happy medium of money going out, your debt, to the value of your property and money coming in. Having enough high value properties to offset your debt so that they are self-funding is your ultimate goal.
Rule 2: Properties must be easy to hold.
When looking for investment properties consider the condition, the age of the dwelling, and the location. All of these factors play an important role in boosting the performance of your investment. The easier the property is to hold the better, meaning the lower the maintenance requirements and costs, the more money in your pocket.
Rule 3: Get the right property for the right area.
It’s important to research the properties you’re looking at and the area they’re in to reduce risk and boost earning potential. Consider areas that you would want to live, then look at the available properties in that area. Take into account what is around the property. Is it close to different lifestyle options – parks, beaches, shops, restaurants, open spaces? Is it in a flood zone or brushfire zone? Make a list of the pros and cons of each property to make the most informed choice.
Rule 4: Don’t make decisions from your heart – you will never live there.
This property is for investment. While it might be tempting to choose a place that you love, remember that you will not be living there. Always keep your goals in mind – passive income to secure your future and the gains to be made from the investment.
Rule 5: Doing things yourself costs more than you think – consult with professionals.
Especially if you are not sure how to invest in property. OJ Pippin Homes has a highly qualified, experienced team whom can help you through the process of investing in property. They can take the guess work out of all areas of investing in properties saving you money and stress. They have a network of highly qualified, recommended professionals in associated industries, to take the hard work and stress out of property investment.
Rule 6: Avoid student accommodation and serviced apartments.
These are risky. While cash flow looks great on the outside, they limit your occupancy choices, making you reliant on a small segment of the market. Serviced apartments can also hurt your cash flow because the management fees are often very high.
Rule 7: New properties are easier to cash flow. New means very little, if any, maintenance cost.
Brand new dwellings built by OJ Pippin Homes are covered by seven year structural and twelve month defect warranties. If there is something wrong during the warranty period, there will be no cost to you for having it fixed or repaired. A new home with no maintenance issues also means renewed leases and happy tenants which will keep your cash flow buoyant.
Rule 8: Try to get a variety of positively and negatively geared properties – diversify.
Just like diversifying stocks, having different types of properties is wise. Using the positively geared properties to upgrade and renovate the negatively geared properties is smart use of your money. Make your cash flow work for you instead of you working for the money. Positively geared properties are self-funding, with a return on investment, whereas negatively geared properties usually have some money going back into it. The overall goal here is to turn your negatively geared properties into positively geared properties, eventually earning a return on your investment.
Being knowledgeable about investment property, and following these eight rules will help you succeed in reducing your risk and boosting the performance of your investments.