Property investment may seem like the new buzzword but like most people looking to venture into purchasing their first investment property or trying to build on their investment portfolios, knowing the ‘where’s’ and ‘how’s’ can be quite intimidating. It’s not surprising that most find the entire process quite overwhelming and decide to cut the cord before they even begin.
So why invest at all?
Investing in property has many benefits, including capital growth and rental yield. Property has been a popular route to wealth for many Australians for many years while others are diversifying into non-residential property via property trusts and syndicates. Sensible investments in property have many attractions. It has the potential to generate capital growth (an increase in the value of your asset) as well as rental income. Investors need to have a keen awareness of the interest rate environment as higher rates might affect their expected net return and the market for their property should they wish to sell. A few tips are all you need to make sure you are on the right track as the right investment can be both financially and emotionally rewarding.
Can you afford it?
Checking your finances should always be the first step. This will give you an idea as to how much you are able to invest or borrow to invest and what investment opportunities fall within your range.
Speak to your lender or a trusted mortgage broker to see whether you meet all the criteria for pre-approvals. This is your chance to find out whether you qualify for a loan and check your credit rating.
Set the right goal
A vital step in any investment is a feasibility study to identifying what you potentially could expect from your investment property. Create a plan, keep it simple, manageable and review it on a regular basis.
Understand risk and your attitude towards it
With any investment there are potential risks, understanding these risks prepares you emotionally and financially. It is best to speak to a trusted and experienced agent who can take you through the process in creating the right strategies for you.
Make budgeting your new best friend Budgeting is the only way to ensure you’re able to balance your income and expenses. It allows you to see where you’ve been spending your money and helps you to plan for bigger expenses down the line. Make sure to set this up even before you start looking for a property.
This is the best part. Once you have your pre-approval, know what you are trying to achieve and have a budget plan start your research. The more you research, the more you mitigate risks involved. This is when you get your appraisals done and create a shortlist of properties that have a promising future and finally when you have selected your ideal property, make an offer and negotiate.
Be informed and stay focused
Use the tools available to you to make an informed decision. Knowing the market can be key to making the right investment choice. The right agent makes all the difference and can take away most of the hassle giving you valuable peace of mind. Make sure you stay focused throughout as investing in property is a business decision, not an emotional reaction.