Brent is one of our CAD guys, and has been looking at buying a rental property for a while. Hes recently taken the plunge and has given us a bit of a run-down of his experience.
As I reflect on the last 3 months, I feel like we have been through the full range of emotions a property purchaser has to endure.
There has been apprehension, inner contemplation (are we making the right decision), elation when we found the perfect property, a 3am mad dash to South Taranaki to offer first on a new listing, and disappointment when the property was sold un-conditionally.
However, things turned out very well, and I feel we were lucky enough to have a back-up property available, and I have just driven six hours, with a brand new set of keys to our first investment property.
We decided to focus our search within South Taranaki, due to several factors.
The region is a productive heartland of the country, possessing fertile agricultural and horticultural land, good average rainfall, a rental shortage, a mature industry, and relatively affordable properties.
In mid-January 2020, we decided, instead of procrastinating and continually searching for investment properties online, we were ready to make the move to purchase an investment property.
These are some of the key drivers, and risk analysis we used to move forward, with our decision.
We wanted to create an asset that could be used to help our children purchase a property in the future.
We were looking for a passive investment, with good cash-flow that raised the bar, in terms of comparable rental properties on the market, with the intent to secure good tenants.
We wanted a property that was affordable, provided a good rental yield, and would still be viable (in our personal situation) under changing world economic conditions, potential higher interest rates and lower demand cycles.
We also wanted a property with flexibility, in a central location, and with the potential to add development in the future.
We settled on a Renovated 1930’s Bungalow that possessed some significant (and expensive) upgrades. The house has a new kitchen and has also been re-lined, re-wired, re-carpeted, has double Glazed Aluminium Windows, and is insulated to current Tenancy regulations healthy-homes.
We are extremely pleased with the process and outcome, and some of our learnings for buying a rental property in a location we were not so familiar with, were as follows:
Develop good relationships with Local Real Estate Agents. You want to introduce yourself, and show to them you are a serious buyer, and you will be rewarded with the latest (and most relevant to you) listings.
Understand your Strategy and Outcomes. There are plenty of resources available online, books and magazines.
Establish good relationships with a Lawyer, accountant, mortgage broker, and property inspection service. Having your finance pre-approved may give you the edge when it comes to a multi-offer situation.
Have good systems for evaluating properties
When you are interested in a property, Investigate the site and property potential.
Obtain the property file from the Council and conduct a desktop review of the planning regulations. (We can help if you are unsure of this)
Brent referenced: "Create Wealth" by Andrew King and Lisa Dudson.