Many people decide to invest in a Hunter Valley investment property and often see this as a fool proof method of making money, or even view it as being a “get rich quick” scheme. Who could really blame this type of thinking, with the overall positive performance in Hunter Valley investment property trends and prices over the recent couple of decades. These positive trends can also be coupled with investment incentives such as tax breaks including the controversial negative gearing, the opportunity to dip into superannuation funds in order to be able to purchase an investment property (though one can not live in the property paid for using super), and having the ability to borrow against current owned property make this an even more attractive proposal.
With Hunter Valley property investment looking like such an attractive and risk free venture on the surface, the process can actually be much more challenging and arduous than expected. Without the right knowledge, professional guidance, experience and research, investing in property can potentially turn into a highly expensive investment that may not yield the expected results or worse may earn a loss on investment. Often first-time property investors will venture into the property market without being fully aware of the challenges involved and this can not only lead to financial consequences, it can also lead to spending excessive amounts of time, taking away from other aspects of life.
At Bailey Property and Livestock, we will share some of our tips on how to go about investing in property the right way and earning a return on your money and time invested.
Why The Hunter Valley
The Hunter Region is a diverse economy that is the largest in regional NSW contributing $347 billion to the total NSW economy, that is driven by mining, tourism and the wine industry, just to name a few. With the importance of the region to the state’s economy a number of large infrastructure projects are currently underway which will contribute to an increase in employment, with the region’s economic activity and growth predicted to increase by nearly 75% on current levels by the year 2036.
Couple the increased economic activity and importance of the Hunter Region in recent times with an increase in popularity due to tourism and increased proximity to major centres such as Newcastle, Gosford and Sydney due to improved transport infrastructure, the Hunter Valley and, in particular, areas such as Singleton, Cessnock, Maitland and Branxton among others have seen great potential for investment with relatively low house prices and thriving economies.
Read on to learn about our top 8 insights and tips for success for your Hunter Valley investment property.
Insights and Tips for Success
Picking the Right Suburbs and Locations
Naturally some areas will be more in demand than others and will appeal to different markets based on the various attractions of the area such as proximity to schools, shops, transport etc. Looking for suburbs which have a relatively low cost compared to other areas and high future growth potential, or areas which are on the rise, is likely to be much more financially beneficial in the longer term.
Knowing Your Budget
As with any other type of property search or large investment, it is important to have a budget prior to engaging in any purchase. Setting a budget and not exceeding it will help in determining what type of property you buy and the risk that you are prepared to take. This will also help save time and stress when it comes to organising finance, and by sticking to a budget and being able to look at property trends and predictions where you are looking to invest you will be able to determine a realistic potential return on investment.
Just as in everyday life, from time to time unexpected expenses and events will occur that will need to be sorted out and will possibly need to be rectified in a timely fashion before becoming larger expenses. The same is no different with property investment as on occasions something will pop up that needs to be fixed as a matter of urgency. It is preferable to have a small amount of money sitting aside in a dedicated account so that when this does happen there is no need to stress or worry about where to find the money to cover these expenses.
Engaging a Professional Property Manager
Engaging a professional property manager can not only potentially be the difference between making a return or loss on your investment or how bigger your return is, they also know all the ins and outs of Hunter Valley property investment and can save you a significant amount of time and stress. A professional property manager can not only take over the day to day management of your Hunter Valley investment property including tenants and any issues that may arise, they will also be able to help in minimizing day to day expenses and can provide reports of overall expenses, including those that may be claimed as tax deductions.
Maximising Taxable Expenses
By keeping accurate records of all expenses related to your investment property, whether this be loan repayments, incidental expenses and the cost of property management, you will more likely be able to maximise your return when it comes to tax time.
Spending and investment in infrastructure from either federal or state government, or even investment from private firms is often a good indicator of an area with future potential. Things such as an extension of a rail network or building of a new road can possibly make an area more accessible for both businesses and residential purposes alike.
Property Features and Appeal
Having the right features can have a greater appeal to potential tenants. This not only allows for a perceived better value, but may make the property more appealing to potential tenants that are looking in the same area or in a similar price range. Some simple ways to increase tenant appeal include painting the walls, ensuring that the flooring is maintained, updating the kitchen, renovating the bathroom, having built in storage and keeping the property tidy and maintained, among other things.
The most important thing for any property investment (even for those who are experienced in property investing) is to be realistic about the whole process from start to finish including being aware of the time and effort involved, as well as the expected return on investment (money doesn’t grow on trees…or houses), and the potential risks involved.
If you’re looking for your first (or your next), Hunter Valley property investment, contact the experienced and dedicated team at Bailey Property & Livestock and let us help guide you on your Hunter Valley property investment.