Brisbane and South East Queensland (SEQ) has long been a top choice of real estate for property investors from all over Australia.
In comparison with other capital cities in the country, Brisbane and Queensland real estate in general is often more affordable.
People from the southern states view Queenslanders as having a great lifestyle – and of course, we do!
Furthermore, given the interstate migration, infrastructure development and other strong economic factors, the area looks to have strong growth prospects for real estate and property investment.
Why wouldn’t a property investor want to own rental property in SEQ?
Real Estate Market Shakeup
And if that doesn’t sound enticing enough, Brisbane and SEQ real estate is about to get even hotter! (Pardon the pun.) The 2032 Brisbane Olympic and Paralympic Games are just around the corner. This means that SEQ is going to be in the spotlight, attracting attention – and demand for accommodation – from all corners of the globe.
Rental Property Potential
Getting a region ready for such an event takes years in the planning and creation, so efforts have already started in order to be ready in time. Not only venues and accommodation for the many visitors who will attend, but upgrading of transport systems is also underway. And if there’s one thing property investors know about the value of real estate, it’s that good amenities – like excellent transport – can be a game changer for conveniently located rental properties.
So, if owning rental property has been on your mind, now is certainly the time to ramp up your research.
Own Rental Property – The Smart Way
However, simply buying a property in Brisbane or other areas of SEQ is not in itself a certain guarantee of success. As well as:
- buying the right rental property in the right place,
- using the right ownership structure and
- getting suitable financing,
- paying the right price (or certainly not too much) and
- being sure to check out all the Council and Planning Department implications related to the land,
there are other factors to take into account to be sure of success.
1. Choose the right location and property type
Location is key when it comes to property investment. As the old saying goes – location-location-location. Location determines the demand for the accommodation, the rental yield a property will command, the likely capital growth (due to demand and scarcity), and vacancy rate of your property (always having someone wanting to rent it).
In SEQ, there are many options to choose from. Options range from inner-city Brisbane apartments to coastal townhouses and regional houses.
And – when it comes to ROI – not all options are created equal.
Investment property research
To find the best location to own an investment property, it’s critical you do your research.
Make absolutely sure to understand the following:
- market trends,
- demographics,
- infrastructure, and
- amenities
of each area you’re considering purchasing in.
Investment property strategy
You also need to consider your strategy. What are you hoping to achieve with any given purchase? Cash flow? Capital growth? Buy and hold long term?
Your budget is also important, as is your ability to service the loan if interest rates change or the property is vacant for any period of time.
Also, work out your risk propensity as an investor – are you young with many years to reap rewards or are you nearing retirement and not wanting to have any hiccups whatsoever?
All of these elements are affected by many factors. It is by no means a simple equation!
Types of properties
The type of property you choose also matters. Whether you purchase a large property or a smaller one, whether it’s newer or older, will all affect the investment over time.
The type of property it is affects the maintenance costs, tenant appeal, taxation implications and resale value of your investment.
You also need to consider the property type you purchase with respect to the type of tenant you anticipate will want to live there – which will vary by location.
Who do you expect will be renting your property?
Consider all of these factors very carefully and research thoroughly and your results are likely to be much more pleasing. Certainly do not take anyone else’s ‘good word’ for it. They do not have your best interests at heart – you do!
2. Appoint a professional property manager
Managing your own rental
Owning investment properties is not ‘set and forget’! This is especially true if you opt for self management. Managing an investment property properly takes time and focus. If approached half-heartedly, it can be time-consuming and stressful.
It is essential to be familiar with the legalities, regulations, and responsibilities involved. The list is long and growing longer by the day! Smoke alarm regulations and pet rules have changed recently in Queensland – and more changes are coming (hint: surrounding rent increases).
The right property manager on your ‘A-Team’
So, we always recommend having an experienced and qualified professional property manager who can take care of the day-to-day tasks related to your property.
Issues are less likely to arise when your property is in expert hands, but when they do arise, you have an experienced professional dealing with them. Many property owners think that’s priceless!
A good property manager help landlords with:
- Attracting and screening well matched tenants
- Correct procedure for payment of bond and collecting rent
- Conducting entry/exit property condition report and regular inspections
- Handle maintenance issues and repairs of a general nature
- Handling complaints and working through disputes
- Providing advice and updates on market conditions
- Keeping abreast of legislation
DIY landlords overlook this
It may seem like a case of ‘spend money to save money’. However, by hiring a good property manager, you can save yourself time, money, stress and inconvenience. (Do you really want your tenant to call you at 10pm on Sunday night when the hot water service has burst and it’s 5degC?) Perhaps even more importantly, if you have the right property manager, it will ensure that your property is well-maintained and compliant with the rental laws including having the correct paperwork and correct procedures in place.
You can also benefit from their expertise in the local market. All of this leads to the property owner maximising rental income, occupancy rate and thus – ROI.
Property management fees vary depending on the level of service and which company you choose to go with. However, (check with your property-wise accountant) fees are generally tax-deductible and certainly worth the investment in the long run.
Give us a call today if you’d like to discuss this further!
3. Improve the market value of your property
One of the very best ways to increase your return as an investor is to improve the appeal and market value of a property.
This is where paying the ‘right price’ (i.e. not paying too much when you purchase) or better still – pay below market value when you purchase – and then increase value through renovations or developments comes into play. By making a property more attractive and functional for tenants or buyers, you can increase its rental or sale price.
However, not all renovations are equal when it comes to adding value to an investment property. Be sure to be smart and diligent about what improvements you make to your property. It’s possible for some renovations to cost more than the value they add.
Among the most impactful improvements for renovations are:
- Internal and external paint jobs
- Replace worn floor coverings
- Update the kitchen and bathroom(s)
- Install airconditioning and/or heating
- Add security systems
- Provide storage space
- Landscape garden or courtyard areas
Check out similar properties to yours in the area
Before starting on any renovation project, though, be sure to have a well thought out budget and plan in place.
As investors, we should never spend a dollar to make a dollar. Always aim to make $3 to $5 in value return for every $1 invested in a property.
Also be sure to have researched the market thoroughly to be very sure of the potential impact of your changes on your rental or sale price. This is not the time to let emotions get in the way of facts and reality.
4. Actively manage your financial strategy and status
Owing rental property is just like running a business. Whilst the strategy and plan at day one is set and underway once the property is purchased, renovated and rented, it doesn’t end there.
Largely, status quo may reign. Yet, keeping abreast of finances on a regular basis is critically important, as the financial environment can change rapidly.
Be sure to review your financial strategy regularly and make any adjustments needed.
Factors such as:
- Loan type (e.g. investment loan) and interest rate
- Cash flow and expenses
- Tax deductions and benefits
- Insurance coverage and protection
- Other costs not budgeted for
need to be kept current.
Your ‘A-Team’ Help You Own Investment Properties
Your property wise tax accountant and a mortgage broker – who both ideally will also be a property investor themselves – should be on your property ‘A-Team’.
The other important person to have on your property ‘A-Team’ is your experienced, professional property manager.
All in all, investing in rental property in Brisbane and South East Queensland offers a potentially valuable opportunity for great returns.
With the upcoming 2032 Brisbane Olympic and Paralympic Games, the region is anticipated to experience growth and increased demand.
But to maximize your investment returns and to ensure a positive experience, it’s crucial to be a wise and savvy buyer.
To have the property management specialists on your ‘A-Team’, contact Position One Property today.
We offer you expert guidance and you’ll benefit from our 20 plus years of experience in the business.