Investing in property makes sense. It tends to be a secure way to make money, as property is generally a safe bet. The value of your property should increase over time, which means you’ll benefit from capital growth as well as rental payments. If and when you decide to sell the property in the future, you can generally expect a tidy profit.
But how do you get started? Luckily, property investment isn’t too difficult, and you’ll get better at it over time. Here are some strategies to follow along the way.
1. Get a pre-approval
Don’t just talk to your regular bank – use a broker. A broker will find the best home loan option for you – and this could mean savings of tens of thousands of dollars over the years, or more. With your pre-approved loan in place, you’ll be in a better position to put in an offer when the right property turns up.
2. Set your financial goals
What are you hoping to achieve from an investment property? Are you looking to replace your income and retire? Are you looking for supplementary income from rental payments? Or are you looking to buy, renovate, and sell at a much higher price?
3. Create your selection criteria
Asking yourself a number of important questions at the start of your search will make things much easier. For instance, how much money do you have to invest? Which towns and neighbourhoods are you willing to buy in? Does it matter what the home is made out of – are you willing to maintain a weatherboard? Are you looking for a freestanding dwelling or a unit? Once you decide on what it is you’re looking for, you’ll narrow your search and you’ll soon be able to see a bargain when one comes up.
4. Get to know the market
Again, the longer you do this, the better you’ll get at it. Visit the various real estate websites, and sign up to their automated searches so that every day, you’ll receive an email with a list of properties matching your criteria. Find out what the average prices and rental yields are in your area, and see if these returns match your financial goals. Turn up to open homes, and make time for property inspections. Meet with local real estate agents and tell them what you’re looking for – and they’ll often notify you first when something meeting your criteria turns up.
5. Don’t rush it
The property market moves in cycles. Depending on a range of economic influences, property prices can go through a period of strong growth or a “bubble”, remain stagnant, or even fall. Buying at the right time means knowing the market and watching the trends, and it ensures you’ll get the best value for your investment.
6. When you know you’re sitting on a goldmine
There are a number of factors that make a great investment. Close proximity to services such as public transport, schools and shops is great. If the house is close to nice cafes or a beach, even better. If the house is within 10 km of a major city, that will also increase its value. Also keep an eye out for properties that are experiencing major population growth. That means you’ll be able to buy a bargain now that will increase in price in the not-too-distant future. Does the property have off-street parking? Is a supermarket nearby? Is there anything that would put people off – like being near an industrial estate or being located on a busy arterial road? Think like a tenant when you’re buying a house, and that will keep you on the right track.
7. Make your profit when you buy
Look at the value of properties in the area you’re considering buying in. Consider the price of the property and how much it will cost to bring it up to scratch, if anything. If you were to sell it tomorrow and make a profit, this is a great investment. Likewise, if your rental income were to exceed your mortgage repayments by a comfortable margin, this is also a fantastic property to consider.
By Darel McBride
Follow Darel on:
