The Secret to Buying Investment Property That Is Always Rented
After buying a second investment property, I thought I better put a plan in place. The reason being the real estate agents that I was dealing with saw dollar signs, and were making me go all around town, looking at the ‘what if’ properties.
This wasted my time, and time is money.
So I devised a set out rules that I now follow whenever I decide to look for an investment property.
With the average tenancy duration being just over 16 months in Melbourne, the longer the tenant stays in the property the less cost I have in finding a new one. This statistic is pretty common in both Australia and New Zealand metropolitan areas.
My first rule: the property must be near a school. Also, the longer the children can go to this school the more chance the tenant will stay in the property. Generally speaking youngish school age children do not create as much property damage for you to fix. Mums like to keep the nest tidy while the child grows up. Another general statistic is that families more often than not have at least two children, which means while one has finished at the school, another one has just started … this equates to a longer term tenancy.
My second rule: a supermarket must be within walking distance. It is a hassle for parents to load up the car, put the child in a car seat, and any additional bits, just to get a loaf of bread from the shops. It is easier to put the child in pram and walk to the mall or supermarket.
My third rule: public transport should be outside front door or within a 3-5 minute walk. Some families do not have a car, or only have one car which stays at home with the children. This means public transport is important, is a cheaper way to travel and much better on the environment.
These days, every time I see a real estate agent I make sure that before I see a property it has all of my rules covered – no exceptions!
It may surprise you to learn that I always found, and continue to find, a number of properties that meet my rules. These properties are often a little further away from the city centre, which means a cheaper purchase price. Plus, many families prefer to be in suburbia – a better place to raise their children.
Letting the real estate agent know my rules before I looked at any property also meant I didn’t waste my time or money in travelling from place to place as they knew my specific needs and so did not show me properties that had no potential for me.
If you don’t tell your real estate agent what you want and you say “show me places” they will often only show you what they are having trouble selling in the hope that you’ll buy it.
Put your real estate agent on notice – you are in the market to buy, but only if you are shown properties that fit your requirements. If they try to show you properties that don’t fit the criteria you’ve laid down, do the Donald Trump thing and fire them. Remember, they are there to service you and your requirements, not their desire to sell!
You are the president of your company, time is money and if an employee wastes your time you need to deal with it immediately.
When you become a practised real estate investor you will look to your ‘team’ to help with every purchase. Your team should include your real estate agent, accountant, mortgage broker and lawyer – you need to trust these people implicitly.
In my next article I will discuss who is on your team and how you can manage them effectively. If you plan to be a major player in the real estate investment market you cannot expect to do everything yourself.
Other articles on the way include researching a potential property, making an offer, getting your finance approved.
Remember, property investment is only one strategy to creating wealth. It is a long term strategy meaning you will not have a cash flow, but over time you will gain good increases in the value of the property and needless to say this will show how wealthy you become.
For other fantastic strategies on creating wealth through real estate (and more) go my website www.dynamitewealthcreation.com and order your FREE wealth creation DVD.
