When it is done right, investing in property can help you to build wealth for your future. In Australia, property is currently a very popular investment and many people are enthusiastically jumping into the market to make the most of the low interest rates currently available. 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 what your end goal is – it might be financial freedom, to tie up some extra funds, or to live in the property yourself in years to come – and then make a plan that will help you reach that goal in a suitable timeframe. Review your plan on a regular basis to make sure you are on track.
2. Your preferred investment strategy
If you are 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 property that is unique, special or different, and one that you can renovate or redevelop in order to produce better capital growth.
3. The type of property
A good investment is a property that will be in continuous strong demand from both tenants and owner-occupiers. This is because tenants help pay off your mortgage, whereas owner-occupiers push up 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 will 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 will have to pay a premium to the developer.
Another thing to consider in purchasing a new unit as an investment property is that many owners in the building will most likely be investors also. It is 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
Location is very important when it comes to your investment’s long-term performance, so look for a property in a suburb that has always outperformed the averages or one that is being renovated or redeveloped. You will 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 you look 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 will need expert input and advice from the following people: 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
Successful property investors never stop researching the market to capitalise on the best opportunities. You should familiarise yourself with the various Australian property markets and not just your local market, in order to find the best potential for profit.
If you are looking to invest for the first time or expand your existing property portfolio, or venture into investment for the first time, contact us today. We will help you with your finance and give you referrals to professionals who can help you with the purchasing process.