You’ve bought your first home. Congratulations! But, getting those keys handed over is only the beginning. Now, the management of your new property investment begins. Not sure what to do or what to expect? Here is everything you need to know about what comes next after buying your first property investment.
Are you moving in, or renting?
The first thing you need to decide is if you are going to be moving into your new property or renting it to tenants. If you decide to rent your property out, you need to make sure that you find a good agent from a property management agency. A good agent will help you to secure great tenants and ensure that the property is well maintained. They can also provide you with advice on rental pricing as well as any repairs needed, cost of those repairs and may even recommend a good local contractor to do them. Make sure you compare agency fees before signing up, but you also need to look at who provides the best service for your property’s needs.
Don’t spend, spend, spend!
Whether your property is positively or negatively geared, you need to make sure that you are building up a cash reserve. If you don’t give yourself a buffer to cover unexpected expenses, then you could run into some trouble. A good rule of thumb, make sure to always have saved 10 per cent of the value of the property. So, if you purchased your property for $300,000, you should be starting to save your way to a cash reserve of $30,000. You may not need it! But, you never know. And, should everything run smoothly with no major unexpected expenses along the way, you’ll have saved enough for some minor renovations that can increase your properties value down the track.
Speaking of renovations…
The first question you need to be asking, does your new property require renovations? Little fixes – such as installing air conditioning or updating plumbing and appliances – may help you secure higher rent, attract quality tenants and even secure tenants quicker. A good way to know what’s needed is to have a look at other properties for rent in the same area. Assess their pricing bracket and get some inspiration for what a little spending now can do to increase your ongoing rental income.
Be smart, plan for changes.
Interest rate increases are as inevitable as the sunrise. Be smart and plan ahead for changes to your interest rate payments.
You’re not an expert, so ask one!
Understanding things like property tax can be tricky even for the property investment experts. The Australian Tax Office (ATO) provides advice on rental properties that any new first home buyer should read. But, it’s also very important that you seek professional financial advice from a chartered accountant. They can assist you with understanding the tax implications of your new purchase as well as what tax benefits or claims you may qualify for. They will also let you know what records you need to maintain, so that you’re never on the back foot.
As a first home buyer, if you follow these five steps after buying your first property you should be on your way to a secure investment future.