When looking for passive income property could be your best choice
Sep 3rd, 2009 | By Les Sheppard | Category: Property InvestingWelcome back! Have you made sure you never miss a new property? Subscribe to updates with your best email address in the sidebar to the right.You see everything new at least 48 hours before the crowd!
Well chosen income property investments can nearly always produce a stream of passive returns, where rental fees received provide for more than the total costs of outgoings.
So what can prospective investors do to maximise their income from property?
• Look for areas to buy where there is strong rental demand. Good indicators are found in employment opportunities, locations near to colleges and universities, and where transport links are strong.
• When buying off plan, avoid buying on large developments, where it can be necessary to compete with many other investors who have property completing at the same time. This can cause a “price war” situation where competing landlords under cut the market rate for rent to cover as much of their costs as possible – potentially leading to short falls against mortgage payments and negative cash flow. Better to buy individual units in desirable locations, where the competitors are fewer and fair market rents more achievable.
• Consider using a property option, where your tenant pays an enhanced rent for the option to buy the property from you at a later date, at a pre agreed price that gives a satisfactory exit point. Property options are becoming more fashionable in the current tough market, and is one of the best income property methods being used by savvy investors. Get in touch to learn more about property options.
• Keep your income property in good decorative order, so it can command a premium rent versus competing units in the same area. Always take a security deposit from tenants, and physically check for unreasonable damages on each change over.
• Make sure you keep a balance to your income property portfolio, with a mix of 1, 2 and 3 bed units available. That way you’ll likely always have something with a strong rental demand all year round, even when market conditions are flat.
Follow these guidelines carefully to make sure your income from property is well managed, with minimised risks, and your chances of making the grade as a property investor will increase.
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