Upmarket Rentals and Property Investment- A Good Mix If You Get it Right

This is a guest post by Sachin

Looks at the issues related to upmarket rental property investment. Discusses the investment advantages of buying off the plan

One of the most common, and generally reliable, means of financing property investment is to rent out the investment property. This strategy usually pays off, with the occasional glitch, but in the upmarket property zone there are a few other issues that need to be considered. There are risks in this very high capital market, and it’s a good idea to make sure you fully understand the possible pitfalls before you decide to rent out your valuable property.

Upmarket rentals basics

– Upmarket rental does have a few things very much in its favor: – The rental clients can afford the rent, and are generally very good tenants.

– The high rates return plenty of cash, and are excellent for good cash flow to fund your property portfolio as well as earning a good income and paying costs of borrowing.

– Rental properties include a lot of options for deductions including renovations, etc.

The cost factor, however, provides a few qualifiers:

– Rates for these properties can be very high. – Maintenance costs can be an issue. – Insurance and repairs can be expensive. – Older buildings may have some significant issues which can cost big money. – Agency agreements may also be expensive.

Risk management- Avoiding costs before they happen

Upmarket rental needs to be approached with careful attention to all the possible scenarios. You need to strike a positive balance between revenue and costs, obviously, but you also need to look at risk management very closely to avoid any surprises from sudden cost blowouts. The worst offenders in terms of risk management for upscale rental properties are the older buildings. They may be charming, but they can cost a fortune to repair, renovate or maintain. These older buildings were originally built under different building codes, some of which date back to the early 20th century in Australia. Some of them also have types of building work which would now be illegal, and will require rectification if you choose to renovate or carry out improvements to add capital value.

Upmarket rental property options for property investors

Most people don’t think of property investment as a form of risk management, but in the rental market, it can be. The trick is to acquire a modern property that is free from the risks of the older properties, preferably a brand new building without any historic baggage or other problems. It’s interesting to note that Australia’s upscale rental properties are now turning to options like buying an investment property off the plan to deal with these issues. These are brand new buildings, built to modern standards. They’re CAD designed, and therefore much better suited to modern wiring and plumbing, and their very high architect standard designs are ideal for the top of the range rental market. Another point in favor of the new off the plan investment properties is that all costs are clearly defined. This is a standard best practice principle for property investment, and it pays for itself many times over. You can cost the values of returns relative to costs literally to the last cent, with ease. You can have the cake and eat it too, with a good investment property. See what’s available off the plan for you, and you’ll never look back.

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