So, you’re planning to start investing in property! It’s an exciting step towards long-term financial freedom.
But the challenge for most first-time investors is not knowing just how to get started. And, importantly, how to ensure you’re laying the right foundations to build a successful property portfolio.
We are only scratching the surface here, but let’s get started with the initial steps you need to know before buying your first investment property.
An excellent place to begin is by asking yourself some questions, such as:
- What kind of property do I want to buy? Apartment, house or commercial?
- How much do I have to spend?
- What suburb/s fits my profile?
- What income or cash flow can I expect from my property?
- What risks are involved?
This is all food for thought and indicates whether property investing is the right move for you. For example, if you don’t have enough savings or equity to buy a house, you can narrow your search to townhouses or apartments.
Your budget will restrict what locations or suburbs you can afford, so it’s a good idea to research rental returns for the suburbs you’re interested in.
Choosing an investment strategy
You can invest in property in several ways, and at the end of the day, you need to work out which strategy suits you best. Whichever path you choose, don’t forget that purchasing your investment property is only the first part of the equation.
Once you’ve secured the property, it needs to perform to its full potential.
This is when you may like to seek guidance from a property manager – one who will proactively advise you on strategies to maximise the performance of your property.
Qualifying for a loan
Investor loans tend to have stricter eligibility requirements than owner-occupier loans as they are considered higher risk by lenders. They, therefore, are likely to have a higher interest rate. So, as an investor, you’ll need to identify what investor loan will suit you. To qualify, you must prove your gross income and identify your ongoing financial commitments.
What else is there to think about?
Don’t follow your heart when it comes to property investment. You need laser focus to generate a profit. All of your decisions should be based on sound research – not emotion.
Avoid seeing yourself living in the property – instead, put yourself in a tenant’s shoes and ask yourself – would this property appeal to me? With this mindset, you’ll have a better chance of becoming a successful property investor.
And remember – property investing is not easy. It’s pretty hard to make a profit. But it is possible and rewarding with hard work, wisdom, and due diligence. GOOD LUCK!
Donna Etchells - McGrath Estate Agents 