3 Things You Need to Know as a Property Investor

Knowledge is Important

Entering the world of investment property is certainly exciting, but it’s important to get your head around the nitty?-gritty. There’s a lot of jargon thrown around, so it’s worth taking the time to understand it.

From vacancy rates to capital gains, there are various factors at play. They can influence the success of your property investment, so it’s essential to know what to expect and look out for.

Steer Clear of Empty

It’s essential to understand vacancy rates so you can make a sound investment decision.

When you choose where to buy a property, there are a lot of things to think about. One of the arguably most important factors is an area’s vacancy rate.

The higher the vacancy rate, the more properties in the area that are sitting empty without tenants. Of course, there are always going to be some properties that are vacant between tenants, but this should be for as short a time as possible.

An area with a 2 per cent vacancy rate may well be a better place to buy in than a suburb with a 5 per cent vacancy rate. In the first instance, two out of every 100 properties are vacant, but the figure jumps to five in 100 in the latter example.

You should aim for as low a vacancy rate as possible, notes the Australian Securities and Investments Commission. Vacancy rates aren’t just important when it comes to finding tenants. If you buy in an area with a high vacancy rate, you could find it difficult to sell your property in future years. We buy houses in Hialeah

Get the Money. Honey

In order to invest, you’ll likely need to borrow money from a bank or non-bank lender.

There are various options available to you, from coming up with a deposit to using the equity in your existing properties to enter the investment market.

If you’re borrowing money to invest, this is dubbed gearing. This can be positive or negative, depending on how much income the rental property generates against your ongoing costs.

Your lender can explain the finance options available to you when you’re choosing to invest.

The Ups and Downs or Capital Gains

You have to pay capital gains tax (CGT) in Australia, so it’s important to understand this concept if you invest in real estate.

If you choose to sell the property, you’ll have to pay tax on the difference between the cost to purchase the asset and the amount you sold it for, notes the Australian Taxation Office.

You can offset any capital losses against capital gains during the same income year, too. Subject to specific exemptions, CGT is not payable on your family home, but it is on rental properties.

When is the Best Time To Sell?

Seasonal & Environmental Impacts

There has always been a debate about the best time of the year for selling a home. Some swear by spring, while others claim that autumn is the best season.

Whichever season you pick, your decision may be affected by your personal situation and economic factors.

Spring

This is the month for daffodils, lambs and spring cleaning, but it is also a time of positivity in the property market. Plenty of vendors see this season as a great time to sell up.

Many buyers take the opportunity to buy a house during this season so that it’s all ready and settled by the time Christmas
rolls in.

Because it’s a popular time to sell, spring often brings competition from other sellers.

Summer

During this season, temperatures are up, the sun is out and gardens are flourising. These factors can make any property look its best and prompt many buyers to head out and about to attend open inspections.

However, many families, couples and singles head off on holiday over Christmas time, so sales and enquiries can be on the low side.

Autumn

By this time of the year, people will have settled back into their daily routines after enjoying the holiday season and will be ready to get on with life – possibly leading to a number of interested people in the market.

Whether it’s setting a new year’s resolution of buying a new home or wanting to get settled before the next school term begins, there are usually buyers out and about.

Winter

Most people think winter is a bad time to sell because people won’t want to attend open inspections in horrible weather. It’s a fair enough assumption, but not entirely accurate.

For one, if someone is planning on moving house, a bit of rain isn’t going to stop them. Plus, if these reservations cause some vendors to hold off from selling during these months, there will likely be fewer residential properties on the market at the time – giving your home a better chance.

Economic Factors

Cash rate reductions can cause buyer confidence levels to rise. More people may think about purchasing property as a result.

Also, if the housing supply has dwindled in your suburb, there could be stronger demand for homes in your area.

Market Conditions

The current conditions of the market can also have an influence on when you decide to sell.

For instance, a buyer’s market occurs when the supply of homes for sale outweighs the demand. In this situation,you may need to set a correct price and ensure you have a comprehensive marketing strategy in place.

On the other hand, a seller’s market is one where buyer demand exceeds the number of houses for sale. This could lead you to obtain a high sale price, due to competition among-st buyers.