Brisbane property investment for beginners: tips, insights & warnings
When home prices rise as quickly as they are right now, there’s always a noticeable spike in Brisbane property investment. And landlords come from all walks of life. Your neighbours and your workmates could well be investors as the ATO says a whopping 2.2 million Aussies own a rental. And 71% of them own just one property investment.
This latest surge in home prices is once again attracting a new tribe of first time investors. And while there’s no school you can attend for “Brisbane property investment 101”, we’ve collected some suggestions. A sample of insights, some warnings and a stack of tips from our experience as property investors ourselves and from working for property investors as their agents over many years.
Please see your bank manager before you start your property search. Like any big ticket purchase it can be heart-breaking to find one you love, only to be told you can’t afford it. (And don’t believe anyone who says investing doesn’t involve emotions – I’d never buy a property I couldn’t call home myself). The lending criteria is different to your home loan, the interest rate will be higher and your stamp duty is much more.
Decide early on your strategy and get financial advice. Is this a “buy-hold-make money-sell” or a “buy-hold-live there myself” kind of investment? Or a future option for kids to uni etc. That’ll impact you choice of where and what to buy. If it’s pure investment you’ll find mountains of articles about “Brisbane’s best suburb” and its “prime investment opportunities”. You are wise to be cynical and check how the author is involved in the said property. Be skeptical of claims that a certain area is about to boom. In 1995 I bought a house because it was near the “proposed” new campus of a major uni. Guess what? – 26 years later there’s still abandoned old cars and goats on that would-be campus!
Have a read of our major survey where tenants told us how they choose their home, what they really want in it and will pay more to have. It’s a good size sample of inner-Brisbane tenants and they will be your customers. I like proximity to major transport corridors because we’ve been doing these surveys since 2000 and access to public transport and workplaces have topped the list of every single survey. Even in a strong market (rents are now rising across most of Brisbane) you will need to compete for tenants. So don’t be afraid to do a small renovation to add to its appeal before you offer the property for rent – adding ceiling fans isn’t expensive but it’s a top 10 feature! Should you add furnishings? We say almost never, but with each property you need to ask a good Brisbane property management firm (yes that’s us!)
What type of tenant would you like to house? A family in a suburban house or city-dwelling singles, couples and small families in apartments? Or something in between? An early piece of advice we received: dive into the median. A neighbourhood’s median rent is the rent most people pay, so that’s the busiest part of the market. The properties with the least vacancy. And usually with median sale prices so they’re often the easiest to resell. There is rental demand for riverfront houses but it’s limited. Similarly you will always find a tenant for a tiny flat if the rent is fair, but most would prefer more.
Let us help with an independent rental appraisal on that property you’re considering. The salesperson and their agency may have an optimistic estimate but, using the online info, our team can do this in quick time and provide a realistic figure in writing for your bank manager.
Beware underestimating the role of a good property manager! We find you reliable tenants, help earn you the best income and work hard to minimise your costs. There’s hundreds of small but critical steps in our work. Renting is a legislative minefield and we believe we earn our fee and more through minimising your risks alone. You must be well-informed on your obligations as a landlord because tenants’ rights are growing. Think you can agree with the tenant on a different notice period for them to vacate? That’s called contracting out of the Act and attracts a fine – and there’s lots more nasty hurdles like that.
Spend time with your accountant. Ask the dumb questions. Learn about tax deductions and get a depreciation schedule. These can make a huge difference to your cost of ownership. Thousands of dollars each year, in many cases. Read about property taxes and bodies corporate and all the things a Brisbane landlord needs to know. Investing is like running your very own small business.
One thing is obvious: When home prices rise at double digit percentages property investing can be hugely rewarding.
Our team would love to help you find your next Brisbane property investment and manage it for you. Please get in touch!