Investing: Rental Properties – Research

Of all the different types of investments available, one of the most common is the residential investment property. Being a common investment, it is also subject to many myths and half truths. The following outlines some of the basics and rescues the vulnerable from some of the myths.

Research

The first important step in making any investment is research. Understand what it is that you are committing yourself to and what effect your decision is likely to have on your financial future. Real estate people will readily tell you that the key to property is location, location, location. What does that mean?

People are attracted to live in homes that are located conveniently near shops, workplaces, schools, medical facilities, public transport and attractive natural features like beaches and mountains. Rarely though are ALL people looking for ALL these features in the one property. So, who are your potential tenants, what stage of life are they at, how big a property do they need and does the area have the facilities they are likely to value most highly?

The need for research is one reason why a first time investor would be well advised to check their local area first, including nearby suburbs and towns. Since you live there you are familiar with local facilities and have access to local resources like real estate liftouts in newspapers and open houses put on by local real estate agents.

One important thing to keep in mind while researching is that you are NOT buying a proeprty for yourself to live in. You are looking for a property that someone else would like to live in. The difference is that you can buy, say, a smaller property than you live in because it will suit someone else’s requirements. You could buy in a suburb that you would not live in but may have features that are attractive to other people. Try to put yourself in the shoes of a potential target tenant.

One more thing. BE CAREFUL if you are invited to a seminar or induced to take a trip where you will be asked to consider purchasing real estate that is a long way from where you live. For example if you live in a regional area and are asked to conbsider capital city real estate. Or you live is Western Australia and you are invited to look at property on the Gold Coast. It MAY be a good deal but it MAY NOT be. Being taken out of an area with which you are familiar simply makes it more difficult for you to adequately reseach a potential property and to judge whether the price is fair for that area.

You could start your online real estate research here.

Next Time: Investment Properties, the financials. 

 NOTE: Tom On Tuesday IS a CPA but is NOT a tax agent, a financial planner, a banker, a stock broker nor a real estate agent. Please note that all blog posts written on financial matters should not be taken in any way as advice from Tom On Tuesday. This blog post contains general information and the opinions of Tom On Tuesday. This general information also only pertains to Australia. Anyone reading this blog should seek out professional advice for their own personal circumstances before making any decisions.

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2 Responses to “Investing: Rental Properties – Research”

  1. Investing: Rental Properties – The Financials Part 1 « Tom On Tuesday Says:

    […] On Tuesday An Eclectic Mix from a Counting Mutant « Investing: Rental Properties – Research Investing: Rental Properties – The Financials Part 2 […]

  2. Investing: Rental Properties – The Financials – Part 2 « Tom On Tuesday Says:

    […] these articles that you are reading, you can still catch up. First there was an article on how to conduct research to find a suitable property. Next there was an article on purchasing and financing a rental […]

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