Tips for buying your first investment property
Easy Tips For Buying Your First Investment Property
So you are ready to buy your first investment property? That is excellent news as property investment done right is a time proven, wealth creation vehicle that can deliver results a lot safer than other types of investments.
However, before you dive head first into property investment and make any hasty decisions, make sure you take the time to do thorough research and really examine the facts in front of you
The below tips, although not new, are designed to get you started and break down the basics of what makes a good property investment in Australia and give beginners a broad overview of what you need to do in order to set yourself up for success
Location & Dwelling: How They Fit Together
Whilst location should be approximately 80% of your focus in terms of growth, don’t dismiss the remaining 20% relating to the property itself. If you buy the wrong property you will cancel out all the good work you have done by choosing the right location. Here a couple of tips on guiding you to selecting the right property -
Familiar markets - Consider buying an investment property in an area you are familiar with, as it will take you less time to research. Check recent sale prices in the area to give you an idea of what you can expect to pay for local properties.
Growth suburbs - Look for areas where high growth is expected, where there is potential for capital gains
Rental yield - Look for areas where rents are high compared to the property value.
Low vacancy rates - Find out about the vacancy rates in the neighbourhood. A high vacancy rate may indicate a less desirable area, which could make it harder to rent the property out, or sell it in the future
Future Building - Find out about proposed changes in the suburb that may affect future property prices. Things like new developments or zoning changes can affect the future value of a property.
Decide On The right Investment Strategy For You
Are you an active or a passive investor? Before buying any property, consider how much time, effort and money you want to invest in the asset on an ongoing basis. Depending on the type of investment property you buy it will require some commitment of your time.
Know Your Figures
It is very important to have a clear idea of your investment strategy before you start. Make sure you have done the following:
Work out your investment goals
Have a clear budget
Calculate your expected investment costs
Calculate your expected rental gains
How much can you borrow
Once you have a clear vision of where you want your investment strategy to go, knowing if you can afford it will become clear.
Buy With In Your Budget
As a first time investor (or any property buyer really) it is important that you buy a property that sits comfortably within your budget. This will not only help reduce financial pressure but ensure that you can also maintain the ongoing costs for any contingencies, such as extended vacancy periods or unexpected maintenance costs.
Do Your Homework
There is no easy way around this.
Remember that research is key – the more you know going into property investment, the better placed you’ll be to make it work for you.
Make sure you keep focused. Investing in property is a business decision and not an emotional one. Speculation can be bad for markets, so keep your long-term goals in mind when making decisions.
Be clear about what you want to achieve
Set a date as to when you want to achieve this goal
Identify milestones you need to do to get to your goals
Don’t be Afraid To Ask For Help
“But I don’t have any experience and have little knowledge about the property market!”
Every investor started exactly where you are now — with no experience, afraid about buying the wrong property and making a wrong move.
When there’s a lot at stake, don’t’ be afraid to get a professional opinion before you jump in.