Today we will talk about some more ideas on how to invest smart in this uncertain economy. We have already talked about looking into homes that fall into the lower third of the market and forgetting aspirations of investing in luxury spots and vacation homes.
Set Short Term Leases
The next thing we want to focus on is short term leases. The housing affordability in Australia is at an all time low. Because of this the rent prices are going through the rough. Some of the more heavily populated areas are even reporting that the rents are going up on a monthly basis. In order to keep you own head above the water you may have to raise your rent prices as well. If your tenant is locked into a long term contract you will not be able to do this. That is why, as an investor, you want to make sure you set short term leases so that you can raise the rent when it is necessary. Being locked into a long term contract will not allow you to control the process of your rentals when you need to.
There are also a very large number of people looking for good rentals. This means that you will be able to choose good people to rent out your units, or homes. If you set your leases to 6 or 12 months you will be able to adjust rent process as needed to reflect the current market. And with so many people looking to rent you should be guaranteed that someone will pay your price.
Don’t Minimize Your Options
There are many great places to look at when you are deciding where to buy your investment property. There are also many places to avoid like the plague. When you are looking for your property check out several different locations and pick out a good handful of options. It is best to have five or six places that you really like and would be willing to purchase. This will ensure that you don’t become too attached to one certain house or property. It is important that you don’t get attached to a certain house and end up paying more for it than what you wanted to. Also take your time and don’t rush into counter offering, make sure that you negotiate the price without a lot of emotion.
In the next installment we will be looking at some more ways to make a smart investment choice.
Sean Rasmussen
Property Options Australia
Property Options Blog © 2006 – 2008
Hi Sean,
Short term leases do give you that flexibility to increase rents if you need to. But, you lose a little in the security of having a tenant locked in for six to twelve months. So, I guess you have to decide what’s more important to you.
I think you can also raise the rents by making improvements to the property that the tenants want.
Making sure you can adjust the rent you charge for your property is a great real investment tip.
Coming from a different country I had to learn that this doesn’t work everywhere. In Germany time restricted rental contracts are not allowed, so once a tenant has signed up you virtually have them in there as long as they like and pay there rent. And even if they stop paying rent on a regular basis you can have a hard time getting them evicted.
So always make sure you know the local rules and regulations before going into business.