Hello friends. I hope this finds you well.
The property market has been booming recently, even in light of the pandemic and with the increasing support from the government, I’m sure some of you may be wondering whether to buy a property now or later.
Whilst the market is still quite strong for those looking to sell, this is expected to slow down from 2023. As Australia tightens its borders and requirements for entering the country, there will be fewer drivers for the boom. There was, in fact, a drop in the net overseas migration and temporary visa holders from 2020 to 2021, which is no surprise in light of the world’s current circumstances. Thus, it is expected that rent will be decreasing from 2022, which is great news for renters but bad news if you’re a property investor.
The question property owners always ask themselves at one point, particularly when it comes to that first purchase, should I get a house or a unit? SQM Research has shown that the rental price in Melbourne has decreased in the week ending 12 August 2021 compared to a year ago, and I expect this trend will continue to other regions of Australia.
However, it could depend on whether you are investing in houses or units. It seems to me that Aussies prefer to live in houses rather than units during the pandemic, as it allows for more space and freedom during lockdowns. If however, you are buying for yourself, getting a unit is not a bad idea. If you are investing, or plan to rent your property out, you may want to consider houses instead. Share Houses are a common practice nowadays and if you have a four-bedroom house as an investment, for example, your revenue will be much higher. You also have to remember that on top of your standard costs such as council rates; units or apartments also have body corporate fees. If you’re purchasing a new unit or off the plan, that usually means the body corporate will increase over time.
If you’re asking yourself, with the expected decrease in rent, how can you minimise the rental lease cost to gain the most out of your investment? Here are some handy tips:
- Always do a background check on your tenants. If they fail to pay rent on time, have a high chance of damaging your property or leave the contract with minimum notice, you may suffer the cost of paying repairs, new advertising, as well as loss of income due to vacancy.
- Instead of just sitting on an empty investment, think about setting your prices to a competitive rate to attract more applicants, which also opens your options when selecting a tenant. If you continue to ask for higher rent, you might miss out on hundreds of dollars whilst the place sits idle.
- Having a good rental agent is crucial. They can help with everything from a-z such as essential maintenance, effective contact with your tenants and compiling financial information for tax time. This can save a lot of money in the long run on rental lease costs, upkeep and taxes.
- Building and maintaining a good relationship with your tenants can save you time and money on unnecessary items. Happy tenants will be eager to stay at your property long term which will reduce the costs of maintaining an empty property as well as, just like in the first tip, wasted income whilst you search for a new tenant.
That’s all from me. I wish you all the best in your property investment.