Are you thinking about investing in Wellington? Here are some points to consider before you purchase your next Wellington investment property.
Do Your Homework!
A great investment usually involves great research. Before investing, consider the selling points of the area to evaluate whether or not a significant number of tenants will be attracted to the property. Is the population and local economy growing in the area? What are the local amenities? Is the property close to at least one local transport system?
Tenants will likely want to use these factors in their day-to-day life, making them important selling points when it comes to marketing the investment property and can help lower vacancy periods between tenancies. Suburbs like Island Bay and Newtown are attractive to tenants as they have good transport and local amenities.
Discover your Audience
Different properties will attract different demographics. Notably, rental properties near universities often attract students; this can cause vacancies during the summer that can be hard to fill. Some areas may have a lower average income, which may attract more low income or benefit tenants to your Wellington property.
Whereas properties near parks and local schools and colleges will likely attract families. Studio and single bedroom flats or apartments will attract singles and couples, a category of tenants who usually stay longer and are less prone to rental arrears.
Find Out The Average Rent In The Area
The rental property market is competitive, this is fundamental to what your rental income will be from your investment property. Look at Trade Me to find the average rent on similar properties listed in your chosen Wellington area.
If the rent can’t cover your mortgage payments, insurance and other expenses then it may be best to start looking for another property, or at how you can change the property to increase the rent. Can you create another bedroom? Could the kitchen or bathroom be redecorated or renovated? Can the property be freshened up with a new coat of paint? For a rental appraisal visit www.howmuchrent.co.nz.
Start Off Small
Don’t run before you can walk. Whilst you’re finding your feet your best chance to success is by slowly building up your property portfolio and learning from your experience along the way – it’s easier to solve a mistake on one property than it is to solve that same mistake on 5 properties at once.
Decide If You Want This To Be A Passive Investment
Becoming a landlord can easily take over your life and become a second full-time job. Before investing consider whether you want to be an active landlord – answering emails, calling tradesmen and being available to deal with tenant troubles 24/7 – or whether you want this to be a passive secondary income.
If you plan to self-manage getting an investment property reasonably close to where you live can help create 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 rental appraisal and chat to a property manager to help you look into your options.
Remember that using a property manager frees your time for other commitments such as family and career, and allows time to focus on buying your next rental property. The gains from owning a larger portfolio will usually far outweigh the savings made through DIY property management.