Real estate in Australia has a lot of potential for investors like tax benefits, asset diversification in your portfolio, competitive returns, appreciation, and rental income. While reaching double-digit returns may seem profitable when first getting started, achieving a ten per cent Return on Investment (ROI) on an investment property in Adelaide is relatively easy if you know what you are doing. So, if you are looking for ways to realize higher returns on your future or current investment property, here is what you should do.
Buy Right
It is natural to get overly excited about a property’s potential, get caught up in a bidding war and offer more than it’s worth, especially in a competitive market. Investors looking to make a return from an investment property in Adelaide do so by buying the property at the right price for its planned use.
Whether you want to rent the property for the long term or fix and slip, your end returns depend on the cost of purchase, plus operational holding costs. If you spend too much on the investment property, your return goes down.
The only way to avoid this is to let your financial estimates guide your purchases and have a realistic, solid idea of those numbers to start with.
Run Your Numbers Carefully
One of the best ways to know if you are buying right is by performing thorough market research and running your numbers. Having a firm understanding of what the property is worth in the current market is the best place to start. For instance, analyse the investment property based on the rental returns and the cap rate.
Be hard-headed about these numbers while also adjusting for unexpected costs, economic variances, and vacancy rates. It may help you align your projected return with the actual return.
You can always consult with professional investment property advisers to assess your financial situation and suggest the best possible solution.
Manage The Property Like A Professional
Managing the investment property like a pro is another critical factor that may help you maximize your ROI. On the other hand, poor management may end up in unnecessary spending on things you are not aware of. In addition, not staying on top of your property managers, attorneys or contractors can result in increased vacancies, delayed job completion or tenant turnover, all of which can impact your bottom line.
If you do not have the time or experience to manage your investment, then hire a professional – it will save you in the long run.
