Tips for Investing in Property – Getting Started

 

Investing your hard earned cash can be a little nerve-wracking especially if you’re a beginner. But the old adage, ‘safe as houses’ is generally correct and property is usually a pretty safe bet when it comes to investing. The property will still be there when the shares are not.

Where do you start? Property investment doesn’t have to be a difficult process and can be rather fun but you do need to be prepared. Here are my top five tips for successful property investment.

 

  1. Research, research, research

The more you know about something, the more confident you are when it comes to making big decisions…and the higher the chances of getting them right! This is absolutely the case when considering property investment. Conduct your own market research to determine where and what to buy. Know what people want from a rental property, how much they’re prepared to pay and what length of lease they want…this goes for residential and commercial property. Also consider future prospects for the area you’re considering investing in – does it rely on one specific industry that may be somewhat volatile or is it an area with strong future growth potential?

 

  1. Do your sums

Now that you’ve done your research and you have some idea what you want to invest in, you must get your financial ducks lined up. Unless you’re lucky enough to purchase an investment property outright, you’ll need to talk to your mortgage broker and accountant to determine how much you can spend and still get the right return on investment. Don’t forget – there’s stamp duty, solicitor’s fees and extra insurances that have to be purchased. Also consider if you want to employ a positive or negative gearing strategy as this will also impact on how you structure your finances.

 

  1. Right property at the right price - you make your money when you buy, not when you sell!

The aim is to buy the right property at the right price…something that will make you money over the long term. For beginners, purchasing a residential property can be a little easier than delving into the commercial market. If you’re already a home owner, you already know how to locate, purchase and maintain a house. Remember, you’re not purchasing your dream home, so don’t look for all the things you want – it simply needs to meet the bulk of the rental market requirements. Purchasing a stand-alone house is also a good option as it is the land that will appreciate over the coming years meaning potential for a greater return on investment in the future. These rules apply even if you are a first home home buyer, but you get other benefits.

 

  1. Get the right property management

Having somebody you can trust fully to manage your investment property is absolutely imperative. Managing the property yourself is an option but it can be time consuming and do you really want to spend every weekend fixing up leaking taps or dealing with unhappy tenants? The right property manager will get you the best possible value from your property, find and retain the right tenants and handle the maintenance issues that will inevitably arise while keeping everyone happy! They can also give you advice on property law, when to review rental prices and ensure your investment property is looked after. The good news is that what you pay for your property manager is often a percentage of the rent paid which can be deducted from the rent and is tax deductible.

 

  1. Don’t forget insurance

Okay, talking about insurance isn’t particularly exciting but like any form of property, it is necessary to protect your investment. It takes just one catastrophic event to essentially wipe out everything you’ve worked for…just talk to anyone that has ever been hit by flooding! Landlords insurance can cover you for damage to the home and its contents caused by natural disasters as well as rental default or damage caused by tenants. Policies do vary greatly so again, do your homework to find out which policy is best for your investment. It is also worth considering personal risk insurance in the event your own circumstances change which impact on your ability to cover mortgage costs for your investment property.

 

Real estate investment is an exciting and proven wealth-making vehicle but it has to be right for you. Do your homework, make sure you’re financially fit and put together an investment plan to help you through the process. If you’d like some help in setting investment plans in motion and identifying suitable properties, give us a call and let’s have some fun!

 

Disclaimer:  Any statements or comments made are general in nature and are neither given nor to be taken as financial advice.

 

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