You've probably heard it said at least once, that property is one of the best investments you can make. Yes, its a big investment, but generally, if you purchase a property in a good location, logic tells us that it will increase in value over a certain period of time. But there are are important factors to consider when shopping around for an investment property, and its key to sit down and contemplate these intricacies before you make your purchase.
1. Plan first, buy later
First and foremost, you need to have a clear idea of what you want this property to be. Is it going to be rented out? What kind of renters would you want? Will it be an Air BnB? Its important to consider these things because it will affect how much time, money and energy you'll need to put into a property. Some properties will require a more hands-on approach, for example, if its a place that will need work to be rentable or if it will need frequent repairs. All of these variables mean that a property that may be a great investment for someone else, may not be great for you. Once you have a solid vision and plan for what you want the property to be, you'll be better able to narrow down the options on the market.
2. Make a Strategy
Do you have a big enough working income to support an investment property? If so, a residential investment property may be the best bet for you. But if you're looking to supplement income or replace your current wage, you may want to look into investing in commercial property. Then you need to determine who is going to own the property. It could be an individual, company, trust, partnership or even a self-managed super fund. AAA can assist you gain finance in any of these scenarios.
3. Figure out Finance
There are substantial entry costs when it comes to property investment. This means its a long term financial decision that requires careful planning as well as consideration of your future needs and goals. You'll need to have a rough idea of what future costs might be, and you need to be prepared for adverse circumstances that may arise in the future. Turning to a trusted financial adviser and mortgage broker will put you in the best position to make smart financial decisions when it comes to your investment property.
4. Market Research
Research is undoubtedly key to making any smart financial decision, and it couldn't be more true in the case of purchasing investment properties. You'll need to do your due diligence on the area you're looking to buy in, as well as gathering pest and building reports/inspections. While your friends and family may have personal anecdotes and opinions, evidence based research and consulting experts like property strategists is the best way to go.
5. Weigh up the Risks vs Rewards
Interest rates are at record lows at the moment, so its extremely tempting to jump into property ownership without properly considering your personal situation. Take the time to weigh up whether this is the right move and the right time for you to purchase. Check out a previous blog post of ours that will help you consider the risks and rewards of owning an investment property.