2 Mistakes Made By First-Time Property Investors and How To Avoid Them
For most Australians, building up a sizable financial nest egg for retirement is a big priority. There are many ways to go about this, but investing in real estate is still one of the most popular options. While real estate may provide smaller short-term returns on your investment if done wisely, it's more stable and highly profitable in the long run.
If you're currently looking for your first investment property, then you have no doubt put a lot of time, thought and research into finding the right one. However, many first-time investors meet with challenges when it comes to renting out their new investment property. Here are two mistakes that first-time investors often make and how to avoid them.
1. Setting an unrealistic rental price
It's only natural to want to achieve maximum rent for your investment property. However, it's vital that you don't enlist wishful thinking over a price that is based on what you can realistically hope to achieve. Even though holding out for a higher amount may make it seem like your return will be higher, this tactic generally proves to be a false economy.
Setting a rental price that is above the market average for your area often means that your property will sit untenanted for several weeks. Therefore, any financial advantage the higher price may have given you will be eaten up by the costs with an empty property, particularly your mortgage. It's wiser to get tenants in immediately for a fair market price.
2. Not using a property manager
Another common mistake that first time investors make is thinking it's a good idea to manage the property themselves. The primary reason for this idea is to save money on weekly or monthly fees charged by property managers. However, this decision is frequently one that investors come to regret and can have negative financial and practical ramifications.
Paying for the services of an experienced and professional property manager should be seen as a valuable contribution to managing your investment. They can help find good tenants, and they can usually find them faster. They can also keep the time that your property sits vacant to a minimum, which is vital for maximising your return.
Property managers are also important for ensuring that you meet all of your legal obligations as a landlord. In recent years, there has been a big push towards tenant rights in most states, and ensuring that you don't breach renting laws is imperative. Added to this, property managers will be well-versed and up to date on the constantly evolving legislation regarding rental properties.
To learn more, contact your local real estate investing service today.
