Buying an investment property can be an excellent way to grow your long-term wealth. It can also offer some welcome tax benefits. But as with any investment, buying real estate comes with its fair share of risk. That’s why we’ve put together our top 10 tips for setting yourself up for property investment success.
1. Know your budget
Calculate how much you can afford to borrow before starting your property search. Besides fortnightly or monthly mortgage repayments, consider upfront costs including stamp duty, legal costs and immediate property improvements. And any ongoing expenses such as property maintenance, rates, utilities, property management, body corporate and insurance.
2. Set your goals
Get a clear understanding of your financial goals before you commit to buying a property. Are you looking to secure an income to support you during retirement? Or do you want to fund your children’s education? Or to offset tax? Whatever it is, create a plan to achieve it and regularly review your situation against the market conditions.
3. Do your research
Good research is the key to smart property investment. Find out what types of properties are in demand in the area you’re considering. Is it on the city fringe, where two-bedroom apartments are popular? Or is the area attractive to families looking for three or four-bedroom houses? Research the rental demand and trends in the area by talking to property managers or buyer’s advocates or by searching real estate sites. And find out whether new developments or infrastructure are planned for the area.
4. Location, location, location
Location is king when it comes to real estate. Look for properties close to public transport, schools, shops, cafes, gyms, hospitals and other amenities. Not only will these improve the property’s rental appeal, but they’ll also make it more likely to experience strong long-term growth. Generally, the closer to the CBD you can afford to buy, the safer your investment. If an inner-city investment is out of reach for you, look for up-and-coming areas undergoing gentrification.
5. Be objective
It can be hard to take the emotion out of buying property. But it’s important to remember you’re buying an investment property, not a home to live in. This means it doesn’t matter if the property or suburb matches your tastes or lifestyle. What’s important is whether it will offer a strong return on investment and be easy to rent and maintain.
6. Get a building and pest inspection
If you’re buying an older property, it’s a good idea to get a building and pest inspection before you sign the contract. The last thing you want is to discover your new property is termite-ridden or in need of expensive structural repairs a few months down the track, leaving you thousands out of pocket. Once you purchase your house you’ll want to call a locksmith to change all the locks on your new home.
7. Freshen it up
A lick of white paint and new flooring in neutral tones can transform the look and feel of a tired looking property. Old properties often don’t come equipped with air-conditioning and energy efficient heating so these can be good valued-adds, too. Make sure the property is looking impeccable by doing a deep clean, fixing anything that needs repairing and tidying up the garden. These updates will attract better tenants and higher rent.
8. Choose the right loan
There are hundreds of home loans to choose from, and it’s vital you find the best loan for your needs and situation. Enlisting the support of a qualified mortgage broker can take the stress and guesswork out of getting a home loan. A mortgage broker in Melbourne has specialist knowledge in home loans and access to hundreds of products. They’ll analyse your financial situation and find the best mortgage to meet your circumstances. They’ll also guide you on every step of the way, including managing your loan application.
9. Get expert advice
Seeking expert support and advice is crucial to property investment success. Consider speaking to qualified and experienced accountants, conveyancers, buyer’s advocates and other experts who can guide you along the way.
Need help securing an investment loan?
Mel Finance offers a friendly, flexible and efficient mortgage broking service, personalised to meet your needs. We’re dedicated to finding the best loan for you and can connect you with other experts to help you with your property investment journey. Contact us today to learn more.