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Send us your realty questions, click here to submit your question.
| 4 Jun 2007 |
Q. I would like to purchase an investment property for investment purposes. Could you please give me some pointers on what to look for when selecting a property?
A. There are obviously many facets to take into account. Given the limited space to answer, I have highlighted 4 areas to consider. Location: Well located, close to shops, schools etc. Ask your rentals realtor if this is a desirable location for prospective tenants. Infrastructure: Check traffic to and from the property and ask about the availability of public transport. Expenses: Determine what your monthly expenses would be i.e. for freehold you would need to ask about rates, taxes and insurance. Find out if your tenant would be responsible for the garden and pool maintenance or not. For sectional title you’ll need to ask about your monthly levies as well as any “special” levy or proposed maintenance. Any later surprises will affect your cash flow. Rentals: Investigate comparable rentals being achieved in the area and work out your shortfall / surplus of rental received versus monthly expenses. Also look into supply and demand of similar properties to rent in the area. Can you afford to carry bond and other expenses if the property is vacant for a period? This can and does happen.
Finally, when registering a bond, ask for an “Access Bond” facility which allows you to deposit or withdraw cash from your bond account giving you flexibility to reduce the term of the bond or utilise the additional amounts if you have managed to pay in more than what was due, to purchase another property.
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