Purchasing an investment property is a dream for many Australians. The process can seem overwhelming, but it’s actually quite straightforward once you’re armed with the right information.
There are five essential considerations for every would-be first-time property investor. Follow the simple steps below, and you’ll be on your way to enjoying the rewards that investment property ownership brings.
1. Make sure it all adds up
When entering the investment property market for the first time, take a close look at your finances, and work out exactly what you can afford to spend. Draw up a household budget, listing all income and assets against outgoing expenditure. This will help you to identify where spending may need to be cut back, and will also assist in planning for the longer-term costs associated with an investment property.
Once you’ve got a better idea of your investment property spend, apply for loan pre-approval through Pula.
Remember, when calculating your spend, there are many other costs to consider aside from the expense of the property itself, such as insurance, stamp duty, and ongoing post-purchase expenses such as land tax, council rates, utilities and property management fees.
The location of your investment property is an essential consideration, and will have a significant impact on rental returns. It can be a little difficult to know where to begin, so as a starting point, consider those suburbs going through gentrification, which tend to be sought-after areas, with values likely to significantly rise in the future. Consider transport links and access to other amenities such as schools and shops – the more conveniently located your property, the easier it will be to find tenants.
3. Get The Facts
The purchase of an investment property is a big step, so it’s important to ask for the facts straight along the way. It’s important to get the information necessary to make the investment decision that is right for you.
4. Understand the risks
Ultimately, there are no absolute guarantees when it comes to the property market. By doing your research and following the steps above, you’ll have a clearer idea of how much risk you’re willing to take on, both short and long-term.
Be extremely wary of get-rich-quick schemes that promise overnight riches and instant returns.
5. What do you want?
It may sound obvious, but it’s important to be really clear about what you want to get out of your investment property, and the reasons why you are making your purchase. Identifying your goals will help you put together a plan to help you get there.