Ferny Hills 
Buying an investment property is different to purchasing your own home. Of course, the obvious difference is that you’ll be renting out your investment with a view to servicing the loan repayments and to leverage on capital gains and cash flow.
In terms of starting the process of purchasing an investment property, this can be a totally different ball game to buying your own home, and preparation is key.
Planning your investment strategy, researching, seeking advice and mentally preparing yourself to be an ‘investor’ rather than a home buyer are wise moves when looking at entering the investment property market. Let’s take a closer look.
Your Property Investment Strategy should look a little bit like this:
- Write your goals:
• how much money do you want to make?
• how long do you want to hold the property?
• why do you want to invest in property?
• where do you want to buy?
• what type of property do you want to buy – house, unit, duplex?
• how many properties (if any) do you want to buy in the future? - Do a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats). Be scrupulous in writing everything down. This will help you to ascertain any benefits versus risks, and also highlight any challenges you might face. You will need to research the area you are looking to invest in, including population growth, rental property demand, other demographics and suburb reports.
- Make a plan of how you will repay the property, how long it will take, and what your income will be. Does this match up with your goals above? Things to consider here include:
• do you want to positive or negative gear the property?
• do you intend to renovate/improve the property to increase its value?
• know your initial purchasing costs, eg conveyancing, taxes, stamp duty.
• know your ongoing costs, eg loan interest, land rates, insurance, property management fees.
• know your rental income potential, and do your math, making assumptions for any maintenance or times when the property might be empty.
• what is your exit strategy?
To answer a lot of the questions above, you will need to do your research. Get out and drive around (if you’re looking to buy locally), scan the internet and talk to professionals in the industry like Professionals Priority. It can also be helpful to talk with trusted friends and family who are already investing. In terms of what you can afford, seek advice from your accountant, bank manager or mortgage broker.
When you start to look at properties, be strong and switch on your ‘business’ mind. Don’t be influenced by the attractiveness or ‘feel’ of the property as you might for your own home. When looking at investment properties, look at the practicalness eg, the location, costs, income and growth potential.
Being prepared, having a property investment strategy, knowing what you’re looking for and putting on your ‘investor’ cap will not only keep your head clear through the craziness of the purchasing process, but it will help to keep you on track and be a guide when faced with key decision-making moments.
Talk to us at Professional Priority. We know property and can help you with the property investment market, potential rental income and provide a rough guide to costs involved in property investment, along with lots more.
