Unit 10/202-220 Ferntree Gully Road, Notting Hill, Melbourne, VIC 3168, Australia
It can be an overpowering decision to buy an investment property. In Australia, property investment has become an area of interest with most people who either already own real estate, or are looking to delve into the property market. However, the percentage of Australian population that owns an investment property is less than 6% (approximately 1.3 million).
There are various reasons for buying an investment property, the foremost one being about increasing our wealth as well as securing our future financially. Yet, we must remember that not all property investments bring in positive returns. So, if you are a newbie and are investing in the property market then here are some tips to keep in mind.
Prior to investing in property, beginners should assess their personal finances, otherwise they might find themselves in a situation where they overspend or are under budget.
Ensure to consider listing all your assets, including your incomes and in the process work out your total expenses so that you can have an idea of how much cash you have available to invest.
Getting a loan is not a difficult task as long as we have a good paying job with a solid employment history.
If we are unsure whether you are financially prepared to make an investment, then it would be a good idea to try getting a pre-approval through our lender or trusted mortgage broker.
However, we must also remember not go ahead and apply for multiple pre-approvals because each time that we apply, the lender will check our credit record. If there are multiple inquiries found then it will send out a red flag on our record and the lender might instead refuse our application.
Here are some tips which we can follow before a pre-approval.
What are the goals that you want to achieve from buying an investment property? Ask yourself this question before you proceed. You can have many outcomes from investing in property. The main investment purpose is to secure our financial future.
Hence, to achieve our goals, we must be vivid about our goals for which we need to set a deadline for when we can achieve them. Once we determine our destination, we can then plan backwards establishing a timeline in which we would like to see phases of the development completed.
Every individual has a different risk profile and it is the attitude towards risk that will impact our real estate and wealth creation journey. Our risk profile dictates our investment strategy.
It is important for us to formulate an investment plan that would suits our risk profile, as it will help us to cope with pressures of investing in real estate without any hassles.
Making a budget even before you start looking for a property can assist us in understanding where our money is being spent and how much. This is a healthy habit which can help us trim our expenses and increase our savings.
Have an ideal purchase plan in place. This will promote our goals of growing our financial portfolio to a point where it grows at the rate we are aiming for. It should serve as a structure for us to stay in the game.
When investing in rental property ensure to stay focused and informed. Making a property investment is a huge business decision and not an emotional plunge. There are many tools available which can help us make an informed decision. Knowing the market can be key to making the right investment choices. Here are some points to keep in mind.
More than often, many investors decide to take the plunge and invest in property without having a clear understanding of the ‘bigger picture’. For every successful property investor in Australia, there are landlords who are struggling to make a decent living as they have over-extended themselves financially.
In other cases, many of these property investors have bought the wrong types of investment properties which is why they do not enjoy the type of capital growth or profits expected.
It’s easy to get overexcited when starting something new especially property investing. But, this does not mean we should give up. If we buy the right properties, we could be sitting back right now, feeling happy, secure, and even proud that we bought properties that more than doubled their values while our peers and everyone else wished that they had taken the same steps in the past too.
Happy Investing to you.