Top 5 Tips for Getting Started in Property Investment
So you may be new to the investment market. Never fear! Even the most successful investors have had to start somewhere. While it can seem overwhelming, there is no need for it to confound. We’ve compiled our top tips on how to get started on your investment journey which we hope will assist you in making some savvy decisions for your family’s future.
- Review Your Budget
This is a critical first step as it will give you a no nonsense assessment of your current financial status. List out your income, assets and expenses. This will enable you to assess the available cash you have to invest. Once you’ve reviewed it, set a new budget which will help you to achieve your goal faster. Cut out any fat which is not absolutely necessary and redirect those funds into your savings account. Pay off credit cards and personal loans as quickly as possible. Download an app which helps you track your spendings to help keep you accountable while you save.
2. Obtain a Pre-Approval
This is recommended as, unless you have gained financial support from a lending institution, there is no point in continuing. The lending institution will assess your budget and give you an indication of how much you can borrow. It’s wise to source independent advice from a trust mortgage broker as banks can have a tendency to overcommit which can put the amateur property investor in some hot water down the track.
3. Define Your Property Investment Goals
Have a clear understanding of the goals you’d like to achieve through property investment and the timeline within which you’d like to achieve them. Write them down and revisit them regularly. Doing this will help keep you on track when you’re tossing up between a $100+ night out on the town and a DVD accompanies by a $3.50 Coles pizza for your crazy Saturday night.
4. Formulate a Purchase Plan
Once you’ve identified your goals, you’ll need to create a plan to achieve them. This is your Purchase Plan which should enable you to grow your portfolio to a point where it’s producing the income you’re striving for. An example of a purchase plan is below. We also recommend identifying an Agent whom you trust and can work with to help you define your Purchase Plan as they can also keep an eye out for investments for you.
- Define your strategy
- Set up the criteria for your ideal investment properties
- Get appraisal
- Due diligence
- Make an offer and negotiate
5. Look for Growth Areas
Invest in a property in an area where there is strong demand for rental accommodation. Buying a property close to transport, universities and schools will make it more attractive to renters. Properties situated near solid or developing infrastructure also have a history of performing well as good access to public transport and freeways make life much easier for tenants who have to commute into the CBD. Tenants are less likely to be interested in properties in suburbs which are hard to access.
And finally, follow your head not your heart. As hard as it sounds given the size of the investment and the potential to become overwhelmed, try to remain unemotional throughout the process as ultimately it’s a business decision which you are making and not a personal one. Remember to gain clarity on your goals from the outset, stay focused and when the going gets tough, visualise yourself in 10 years time sipping cocktails on a beach in Hawaii while your friends are still slogging away in their 9 to 5. How good would that feel?