Spend a little to save a lot long term
Pursuing cheap properties can become an expensive endeavour while median-priced investments in blue-chip locations have a proven track record of success.
EVERYONE wants a bargain property investment, but bargains are often a false economy.
Most “bargains” are less desirable properties in less desirable locations that are not in great demand.
An investor might add some initial value by renovating, but a less desirable property is less likely to grow in value as much as higher demand properties in better, blue chip locations.
I believe the best possible investment for people looking to build real wealth with the least risk is median-priced property in an inner urban location.
These properties are more likely to be priced at or slightly more than market value but are more likely to hold their value regardless of market conditions.
Regarding the location of an investment property, people love the idea of being opposite the water, but it might pay in the long run to choose a property one street back from the water.
Coastal properties generally have more wear and tear, and salt spray is a killer when it comes to concrete cancer.
Once the investment property has been selected, there are many simple things that may cost a bit more upfront, but are guaranteed to save money in the long term. Install a smoke alarm Smoke alarms are not expensive, but a fire can cost a fortune and put the lives of tenants at risk.
In many cases, insurance policies may be void for firerelated accidents if the smoke alarm has not been checked in the past 12 months. Don’t ignore mould Mould might seem like a small problem that is easily fixed, but if it is left for too long it can end up costing a lot of money.
Try to avoid south-facing properties that are poorly ventilated. Make it secure By not installing small things such as window security bars, tenants are at unnecessary risk of harm and theft. The property damage from someone breaking in through a window can often be much more expensive than the cost of a few simple security measures. Get a good property manager If you have a poor property manager or never check the property, you are unlikely to know about minor repairs or maintenance that is needed.
Minor repairs can quickly turn into major, very expensive jobs if left unattended, and can be detrimental to the building and tenant’s health. Don’t skimp on tradesmen After purchase, there can be a lot of upfront expenses, especially if renovations are needed, so it can be tempting to let a friend who does some plumbing on the side to redo the bathroom at a cheaper cost.
But this can end up costing much more in future when you need a professional to fix the errors they have made.
Renovations require time and skill. I always outsource to a professional who can manage everything, and will get the job done to a very high standard very quickly. — Chris Gray is host of
on Sky News Business channel and CEO of buyers’ agency Empire
To avoid big future costs, it pays to hire professionals for renovations.