Are you thinking of investing in the Wellington investment property? Here are some points to consider before you buy your next investment property in Wellington.
Do your homework!
Great investments usually involve serious research. Before investing, consider the outlets in the area to assess whether the property will attract a significant number of tenants. Is the population and local economy growing in the area? What are the local amenities? Is the property close to at least one local transportation system?
Tenants will likely want to utilize these factors in their daily lives, making them important selling points when it comes to marketing investment properties and can help reduce vacancy periods between rentals. Suburbs like Island Bay and Newtown are attractive to renters because they have good transportation and local amenities.
Discover your audience
Different properties attract different demographics. Notably, rental properties near universities often attract students; this can lead to vacancies during the summer that can be difficult to fill. In some neighborhoods, the median income may be lower, which may attract more low-income tenants or benefit the tenants of your Wellington property.
While properties near parks and local schools and colleges are likely to attract families. One-bedroom and studio apartments attract singles and couples, a category of tenants who tend to stay longer and are less likely to fall into rent arrears.
Find out the average rent in the area
The rental market for real estate is competitive, this is fundamental to your rental income from an investment property. Take a look at Trade Me to find out the average rent for similar properties listed in your chosen area of Wellington.
If the rent cannot cover your mortgage payments, insurance and other expenses, it may be better to start looking for another property or learn how to modify the property to increase the rent.
Start small
Don’t run before you can walk. While you are on your feet, your best chance for success is to slowly build your real estate portfolio and learn from your experiences along the way. It is easier to solve a mistake on one property than to solve the same mistake on 5 properties at a time.
Decide if you want it to be a passive investment
Becoming a landlord can easily take over your life and become a second full-time job. Before you invest, consider whether you want to be an active landlord – answering emails, calling tradespeople, and being available to solve tenant problems 24/7 – or whether you want it to be a passive secondary income.
If you plan on managing the property yourself, buying an investment property close enough to where you live can help create a smoother and more efficient property management. However, if you plan to hire property managers, your proximity to the property is less of an issue. Click here to get a rent estimate and chat with a property manager to help you consider your options.
Remember that using a property manager frees up your time for other commitments, such as family and career, and gives you time to focus on buying your next rental property. The profit of owning a larger portfolio usually far outweighs the savings gained through do-it-yourself property management.