Whilst purchasing an investment property is a dream for many Australians, the process can sometimes seem quite overwhelming. Don’t despair, it’s actually quite straight forward when you’re armed with the right information.
Following these four simple steps, will set you on your way to achieving the prosperity that investment property purchase and ownership can bring.
1. Do your numbers
When entering the investment property market, it’s is great practice to have a clear vision of your finances. Knowing exactly how much you can afford to spend will help to avoid many financial pitfalls. A great way to do this is by drawing up a household budget, listing all income and assets against all 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 managing and maintaining an investment property.
Budget consideration should also be given to additional property costs like property insurance, stamp duty, and ongoing post purchase expenses like land tax, council rates, utilities and property management fees, to name but a few.
Once you’ve got a clear vision of how much you can afford to spend idea on an investment property purchase, you’re set to look at financing options and apply for loan pre approval.
2. Location, Location, Location
The location of your investment property is an essential consideration, and may have a significant impact on rental returns. It can be a little difficult to know where to begin, so as a great starting point is to consider suburbs going through gentrification. These are suburbs which tend to be sought-after areas with values on the rise or likely to rise in the future. Transport links and access to other amenities such as schools and shops are also important to consider as the more conveniently located your property is, the easier it will be to find tenants.
3. Risk vs Reward
Ultimately, there are no absolute guarantees when it comes to investing in the property market.
By doing your research and arming yourself with the right information, you’ll be in a great position to assess both the short and long term risks and rewards and then make your decisions accordingly.
Property investment can be filled with many rewards. It is always best practice to be extremely wary of get-rich-quick schemes that promise overnight riches and instant returns as the path to investment property prosperity is never overnight.
4. What do you want to achieve?
It may sound obvious, but it’s important to be really clear about the reasons why you are making your purchase and the goals you are intending to achieve. Clear vision of purpose and goals will help you put together a great plan to help you on your road to achieving investment property prosperity and success.