Five Things You Need to Know before You Buy an Investment Property
Buying an investment property is one of the most reliable ways to grow your wealth. Although the property market lies at the heart of political and socio-economic debate, overall, property remains a lucrative long-term investment for Australians.
But investing in property is not a hassle-free shortcut to riches. You can certainly mitigate hassle and guesswork by taking the proper steps, but you must do your homework before taking the plunge and actually buying.
If you’re interested in buying, but you don’t have any idea where to start, here are five things you need to know before you buy an investment property:
1. How to choose the right property
Of course, the single most important decision you’ll make when buying an investment property is which property you buy.
Investing in real estate is all about capital growth, so it’s crucial that you buy a property that’s going to increase in value over time (at a great price).
But there are a myriad of considerations to factor into your decision when it comes to choosing your property, so you must consider…
2. What kind of information you need
Real estate is difficult to price. For buyers, this is both a bad and a good thing.
It’s bad because an uninformed buyer might end up paying more for a property than it’s worth…
But for the informed buyer armed to the teeth with reliable information, this difficulty in pricing presents a juicy opportunity to acquire an asset well below its true market value.
What is everything selling for in and around the area? What are the demographics of the renters ? If the property is close to a university, for example, multiple bedrooms might be a higher priority than a big backyard for children and pets.
You can get this information from an agent, but before you consult professionals in the property industry, you must know…
3. How to get unbiased information
If you’re consulting an agent or a vendor, do your best to get straight answers.
But remember that the agent represents the seller and not you, the buyer. As such, you should never rely exclusively on their answers. Confirm their information with your own research.
If you find a property that you adore, arrange for an independent valuation. It’ll make negotiating property price much easier.
4. How to pick the right kind of mortgage
Property investment is a long-term game. In other words, you’re going to be spending money for a while before the tables turn and you start making it.
If you fail to plan your finances ahead of time, you might have to sell your investment property before you’d hoped. This would, of course, result in a sub-optimal investment (where some tighter financial planning would have seen a significantly larger return for you).
Investing in property is a proven path to wealth, but it’s absolutely critical that you can afford your mortgage payments over the long term.
If you’d like to discuss mortgage options with a professional, contact us here!
5. Why you should consider a good property manager
You might be thinking that this is a lot to keep track of, and it is. That’s why a good property manager can do wonders when it comes to your ROI.
Property managers keep things organised for you and your tenants. Their job is to help you get the best possible value from your property (which is why, we’re guessing, you’re thinking about buying an investment property in the first place).
In addition to that, they’ll also advise you on issues of law and handle maintenance issues.
And the best news of all: The cost that you pay them is usually deducted from the rent, making it tax deductible.
At Mortgage House, we’re no strangers to the home-owner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage. The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.