The single parent’s guide to property investment

Property investment guide

Hustling as a grown up requires bravery and perseverance under the easiest of circumstances, and as a single parent with a million other things to take care of, it’s an even more admirable feat. 

Property investment can be a great way to passively build your income, although it’s a decision that requires a lot of research and foresight before diving into headfirst. Whilst your kids are growing up, you can potentially create a more secure future for you and your family, generating an entirely new stream of income to go alongside at the same time.

That’s why we’ve put together this article on what you need to know if you’re thinking about dabbling in property investment as a single parent or single income household. Read on to find out more.

First thing’s first: protect your property

The worst thing imaginable is to fork out on a large investment for a new property, only for bad luck, dreadful tenants or a natural disaster to damage the building or destroy the contents inside it. Any investment is worth protecting, and none more so than property. 

Landlord insurance is designed specifically for property investors who want to prepare their properties for the rental market. As renters insurance provides tenants with content cover, landlord insurance is effectively designed to provide building cover for the property owner. Building insurance works in a similar way to insurance for homeowners, providing external cover against damage to the exteriors, roof, and any necessary rebuilding fees. 

If you’re offering tenants fully furnished living spaces, content cover will protect you from internal incidents or theft, as well as damage to internal fixtures like curtains, carpets and fridges. You’ll also be better able to recover rent money lost due to missed payments, or significant damage to the building which makes it uninhabitable, so your investment won’t become something stagnant draining money if anything goes wrong.

Consider what kinds of tenants you’d like to rent to

The way we buy property is undeniably changing. For starters, more first-home buyers aren’t buying homes to live in long-term, but more to build their equity so that they can buy larger family homes in the future. In bigger cities, it’s also becoming much more common for individuals, friends, and couples to organise share housing arrangements that allow them to save money by splitting the costs of rent, utilities, and even the costs of groceries.

If you’re looking to dabble in property investment, then it’s vital that you consider what kinds of tenants you’d like to rent your property to, and then find a suburb that can provide that demographic. For instance, students will have lower expectations but will be less experienced with the protocols of renting; couples will be willing to pay more but may have noisy or accident-prone young children, and young professionals will generally keep your house in good nick but are likely to stick around a lot less longer, so you may end up doing more paperwork as tenants come and go.

On the other hand, if you’re planning to rent out your property on a holiday basis, your tenants will be expecting a much higher quality rental - especially if they’re paying vacation prices for it. You’ll need to market your property differently if it’s going to be listed on sites like AirBnB, and furnish it in a way that caters to holiday makers, rather than people who plan to live and work in the space.

Follow the location checklist

It goes without saying that if you want your property to be a holiday spot then you should pick a town or suburb with a high-tourist volume. You could have a 5-star decked out pad perfect for holidaymakers, but no one is going to stay there if it’s a half an hour’s drive away from the nearest sightseeing spot.

If you’re after students, pick somewhere that is easily accessible to the local university campuses by public transport, and ideally near good bars and clubs - so they don’t do all the partying in the living room. Look up proximity to schools, leisure centres, train and tram stations, and what sort of people the neighbourhood tents to attract. Essentially, build your knowledge on all the things your future tenants will be researching themselves so you can display the answers they’re looking for.

From a landlord’s perspective, you should also think long term. Find out whether the area you’re researching is receiving any investment from the government, and whether it’s considered up-and-coming. These factors will affect the demand now and in years to come. Also research whether the area is particularly prone to any natural disasters such as flooding and bushfires. When it comes to securing your investment property mortgage, having this information to hand will prove useful, as it shows you’re taking the investment seriously. 

Think about the future and property investment

It may sound obvious - any investment involves thinking about the future, right? Here we’re talking more about having a solid understanding of all the potentials, maybes, and options you might have to think about further down the line, in two, five, ten or even twenty years. For example, if you’re investing in a smaller property than the one you currently own, do you plan to use it as a springboard for your child to move into when they are old enough to live independently, or to eventually call it home yourself when your kids fly the nest? 

What will happen if your child decides they want to study abroad, or simply doesn’t want to live in the apartment you’ve had pre-picked out for them for over a decade? If your needs change, or the location of your property is no longer suitable for you to live there, will you still be able to sell it? Or has the median value of property prices in that region experienced a bit of a downturn? Will you also be earning enough at that stage to sell the current investment and purchase something bigger if you want to, or have the capacity to manage multiple properties?

Of course, no one can predict the future accurately. What you can do, however, is have a clear understanding of your own personal investment goals, and how your property investment factors into them. The main reason for this is to ensure you don’t get left with a decaying property that no one can afford to maintain, or find yourself in a situation where the building loses its value and you are left with an investment that becomes something more of a very expensive burden. Having an exit strategy will leave you feeling more confident with your decision.

The Final Word: Property Investment

Property investment is a big undertaking, but there’s many signs to say that right now in Australia, it could be a financially viable option for single parents looking to increase their assets.

Now you’re a little more clued up on what you need to know, and what you need to do, you can set about organising your finances and researching locations and house prices.

So get to house hunting to find the right investment opportunity for you and your family!

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