Achieving financial security is a high priority for many Australians but the path to success can be tricky. According to the Bank of Queensland, property investment can pay dividends, provided it is done with careful thought and consideration.
“Property investing could be a more sensible approach and may just put you on the right path to a successful investment,” says Bank of Queensland’s Nicole Puado.
Nicole, who owns and manages the Floreat branch of BOQ, says there are four simple steps to work out whether an investment loan could be a good way to start building a more secure future.
“Have you found a great piece of property, and are now shopping around for the best possible loan? Before you commit to borrowing, think about what success would look like to you. Ask yourself difficult questions to ensure you’re prepared, rather than be surprised by unexpected changes,” she says.
“Is there a limit to the amount you can afford to guarantee? Have you clearly set goals for the property? Are tenants going to provide you adequate value until you’re ready to sell?”
Nicole says by creating a long-term plan with smaller milestones, you will be able to easily evaluate whether your investment shows the returns you originally expected. This also helps to remove some of the uncertainty in managing the property.
Nicole says it is important to minimise the amount of time spent on managing an investment.
“While it might sound strange to adopt a hands-off approach to managing your property investing, the more you’re able to remove yourself from the process, the more likely you’ll make rational decisions,” she says. “Although you’ve contributed a large portion of your own money, the aim of a strong investment is to make a financially profitable return.
“The less attached you are to the finer details of your property, the more easily you’ll be able to make difficult decisions.”
Nicole says if renovations are required, obtain quotes from painters and other tradespeople, in order to reduce your hands-on time with the property.
“Also allow the landlords and body corporate groups to take away some of the pressure where possible. This way, you can spend your time making strategic decisions that will be more beneficial in the long term.”
It is also vital to understand your ongoing expenses and find an easy way to keep track of them.
“We obviously recommend people first touch base with their local BOQ branch to see what investment loans and options we have that might work for you,” Nicole says.
“In addition to your investment loan repayments, factor in any fees and additional charges. Make sure you do your research and consider some of the fees you may encounter.
“If you’re borrowing a significant portion of your loan, you want to look into insurance to protect your investment in the event of serious injury, disability or involuntary unemployment where you can no longer afford to repay the loan.”
Nicole says ongoing account fees paid to your financial provider for managing the account across a monthly or yearly basis need to be considered as do body corporate fees and council rates.
Nicole advises that people should look for quick wins early on that might attract higher-quality tenants.
“Quick wins can be as simple as touch-up painting, adding new small fittings or whitening the grout between tiles,” she says.
“Small visual improvements can make the world of difference to the overall aesthetics and atmosphere of a property, as well as the mentality of a potential tenant for the property.
“Removing existing furniture to promote a longer stay inside the property can also be a beneficial option when property investing. The more furniture and appliances that tenants are required to move into a property, the less likely they will be willing to move again in six months or a year’s time.
“Ensure a small budget and relatively tight timeline is set when considering these kinds of enhancements, as it shouldn’t be classified as a full renovation. The aim is to minimise the amount of time invested into the maintenance of the property. The less time spent with a property, the less emotionally attached investors are, allowing open-minded, rational decisions.”