The ultra competitive conditions of the current property market have many first-time property investors feeling pressured to buy a property out of fear that they might be priced out of the market. With migration set to soar over the next few years, buyers are outweighing supply, especially with concerns over the rate of new residential building being erected. However, purchasing a property is a big decision and one that should not be rushed into. Getting into the property market under-prepared or too early can end up being costly and reduce your returns on the investment.
We often hear of experiences or stories from when people bought their first investment property. These stories are a great way to educate yourself, taking into account what mistakes they made or things they could have done differently, and even the things they did well.
When you are buying an investment property, there are 3 major considerations to successfully invest:
- Your budget – which is usually determined by what your income and expenses are and what the bank is willing to loan you. Reducing debt and credit card limits, or asking for a pay rise, can increase your borrowing capacity.
- The property itself – the age of the property, size of the block, how many bedrooms and bathrooms, etc.
- The location – proximity to schools, universities, hospitals, public transport, services, shopping precincts, and general amenities. Importantly the feel of the suburb should be considered, especially if gentrification is on the rise. You can always renovate the property in the future, but you can’t change the location, so focus on this primarily.
Get ready with these 5 tips!
- Get your finance pre-approved with the help of a Bernie Lewis Home Loans Mortgage Broker BEFORE you start searching for property, so you can make offers with confidence.
- And always make sure you have a buffer for emergencies, such as the hot water system blowing up just after you settle! Having a rough idea of your costs and putting some money aside each time you get paid is a great way to start. Remember, costs like utilities, property management fees and maintenance (just to name a few), don’t stop when your investment property is empty and there’s no rent coming in, so building a ‘slush fund’ is key.
- An investment property should be purchased with your head, not your heart. These days, property is staged so beautifully that it can make you forget the numbers and fall in love with the property. Do your research on up and coming suburbs, and look outside of your own neighbourhood. An investment property is ultimately for a tenant to reside in, and earn you income or tax benefits…it pays to be smart rather than emotional in your decision making.
- Always get a second opinion and ask your Mortgage Broker for assistance. A real estate agent works for the sellers, not the buyers. Make sure that you always get a valued second opinion and find transparent professionals to assist you through the process, eg: an experienced Mortgage Broker, conveyancer and accountant. These professionals can help you with the numbers and also source building and pest inspectors for the property. Remember, identifying risks upfront could save you a small fortune down the track, so it could really pay to double down on your research.
- And lastly, don’t wait for the perfect property, as the perfect property doesn’t exist. Follow the advice given to you by the professionals and be prepared.
Call Bernie Lewis Home Loans on 8300 8300 to speak to one of our Mortgage Brokers today or fill out a contact form. Bernie Lewis Home Loans have great referral partners who specialise in property investment advice, we also team with an excellent conveyancing service. Call or email us today to learn more.