When done right, investing in property can help you build wealth for your future. In Australia, properties are currently a smart investment. Many people are enthusiastically jumping into the market to make the most of the current low-interest rates to make their first investment.
But it takes careful planning for your property investment to be a success. Here are ten key factors to consider before investing in property.
1. What you want to achieve
First, determine your end goal– financial freedom, to tie up some extra funds, or to live in the property yourself in years to come – and then make a plan to help you reach that goal in a suitable timeframe.
Review your plan regularly to make sure you’re on track.
2. Your preferred investment strategy
If you’re looking to maximise returns, wise investors focus on buying a property below its intrinsic value in an area with a long history of strong capital growth.
Also, look for a unique, special or different property, and one that you can renovate or redevelop to produce better capital growth.
3. The type of property
A good investment is a property that’ll be in continuous strong demand from both tenants and owner-occupiers.
This is because tenants help pay off your mortgage, whereas owner-occupiers push house prices.
More people nowadays trade their backyards for balconies, so think about going for an apartment-style property in the inner suburbs.
4. Buying old or new
Remember, you’ll often miss out on capital growth for the first few years if you buy a new or ‘off-the-plan’ apartment.
This is because you’ll have to pay a premium to the developer.
Another thing to consider when purchasing a new unit as an investment property is to remember that many owners in the building will most likely be investors also.
It’s best to buy an apartment in a building predominated by owner-occupiers, as they typically look after the building more effectively than investors.
The established apartment should also be in a character-filled block that can be cosmetically refurbished, as this can help you increase your rental income and produce some capital growth.
5. Where to buy your first investment
Location is critical to your investment’s long-term performance. Look for a property in a suburb that has consistently outperformed the averages or is being renovated or redeveloped.
You’ll usually find it in a lifestyle suburb in a major capital city near the CBD, amenities or water.
Then narrow your choices further by choosing the best spots in the suburb.
6. What you can afford
You should know how much you can afford to spend and repay before looking for a property.
You can do this by talking to us about getting a pre-approved loan and setting aside some funds for acquisition and holding costs, as well as a financial buffer for an emergency or a rise in interest rates.
7. Who to ask for help
In addition to us, your professional finance broker, you’ll need expert input and advice from the following people: a qualified accountant, independent property strategist, smart solicitor, and, if at all possible, an experienced property investor as a mentor.
They can all help you ensure that your investment is a success.
8. The importance of research for your first investment
Successful property investors never stop researching the market to capitalise on the best opportunities.
You should familiarise yourself with Australia’s various property markets and not just your local market to find the best profit potential.
It’s the first steps that are always the hardest. However, we, your broker, are always ready to help you sort out your situation. Call us so we can help you.