Soaring property prices combined with the evolving legislation regulating the rental market is creating a barrier to purchase for many hopeful investors. Property investment continues to be viewed as a good financial investment however, the ever-changing landscape means that it is becoming increasingly difficult to manage rental properties. If you’re planning to invest in 2022, consider these top 10 tips first:
1. Identify your investment goals
The plethora of new legislation is affecting the short-term monetary gain from property investment. Because of this, it’s vital to make your investment goals clear. Seek out professional advice and ensure that the type of property you’re investing in will help you achieve your investment goals. An expert will let you know if your goals are realistic and help you set out a plan to work towards them.
2. Understand it’s a long game
Property investment has long been viewed as a long-term game. However, there have been ways in which investors could reap the rewards of their investment sooner rather than later. With the extension of The Bright -Line Property Rule that came into action on 23 March 2021, any gains made from selling an investment property purchased on or after 27 March 2021 and sold within ten years of purchase will face a capital gains tax. If the purchase is a new property (code of compliance certificate issued on or after 27 March 2020), the existing five year capital gains tax rule applies. This will impact those looking to invest and retire in the next ten years. Therefore, it’s important you know exactly what you’re getting into with property investment and understand that there will be a significant stand-down period until you can benefit from the financial gain.
3. Identify a clear budget
Once you have decided property investment is for you, identify a clear budget. As of 1 October 2021, Interest on residential properties will be disallowed on properties purchased on or after 27 March 2021, with the exception of newly built properties. This is particularly hard on hopeful first-time investors with low equity, creating a barrier to purchase for many. Removal of interest deductibility will be phased out over four years for all other investment property that is not a new build. It’s essential that you factor in this higher tax bill at the start of the investment process. Alternatively, you can take advantage of the Governments tax incentive to tackle the housing crisis and invest in newly built properties with deductible interest.
4. Enlist the help of experts
It’s vital that you have a good investment team around you. We suggest that your expert team should consist of a chartered accountant, a professional property manager and a solicitor. They will guide you through processes and provide you with professional advice, drawing on their wealth of experience and industry knowledge. This will help you make informed decisions in the best interest of your investment goals.
5. Consider location
Location is a key factor to consider when investing in a residential property. The more desirable a property’s location, the more interest it is likely to get from prospective tenants. But location isn’t all about being in the most expensive area. Good school districts, public transport and shops are always highly sought after. Investing in a property that has nearby amenities will likely increase your rental income.
6. Understand the rental demand
It pays to do your research to understand the market rent for your property type and area. If you’re unsure where to start, seek the help of a professional property manager to assist you with this. This will ultimately help you achieve the best market-related returns for your property. Number of bedrooms, open plan living, outdoor areas, garaging, views, apartment living are all variable factors that impact attraction of different rental prospects.
7. Request a rental appraisal before you invest
In order to reach your investment goals, you will need to ensure that your rental income is where you expect it to be. The best way to do this is to hire a property manager to organise a rental appraisal before you invest. This will inform you of the market value, calculate your lending capability and can be used to help you secure funding from bank providers.
8. Always request a building report
It’s essential to request a building report before you make any offers. A building report will identify if the property is required to have any maintenance work done before it is ready to be rented out. Take the time to review the report extensively to avoid being caught out with any surprises.
9. Stay on top of the evolving legislation
The rental market has changed dramatically over the last few years. In the last 12-months alone, a series of transformative legislation introduced has changed the game for private landlords and professional property managers. If you’re planning on managing the day-to-day of your investment property, it is essential that you keep on top of the evolving legislation. You can keep informed by signing up for the Tenancy Services newsletter. However, in order to navigate the increasingly complex legislation regulating the rental market, it is advised to seek the assistance of a property manager.
10. Keep on top of minor maintenance
As the owner of a rental property, it is vital that you keep on top of maintenance. This will ultimately prevent larger problems from occurring later down the track. Allowing maintenance issues to mount up can often be far more expensive and time-consuming to fix.
Investing in rental property? Ask Quinovic.
If you are considering investing and want professional property management advice, get in touch with your local Quinovic office. We’re a nationwide team of property management experts and have managed over 100,000 tenancies since 1988. When it comes to legislative matters, we have a professional understanding of all new and existing rental property laws and local contacts to assist with any practical matters for the Healthy Homes Standards. No matter how big or small your question is, we’ll be happy to help. Ask Quinovic today.
