Are you in the market to invest in residential property for the first time? Then you need to take a couple of things into consideration. We bring you ten of the most important tips you can apply to stay out of potential mistakes and increase your odds of making a successful choice.
Be Goal-oriented
Identifying the property you want to invest in is one thing, but understanding the financial implications of the investment is a completely different thing altogether. Knowing your goal is a very important tip if you want to achieve utmost satisfaction from your investment. You are advised to start by deciding the goal of your investment, then go ahead and scheme a plan that is bound by time frames.
Make it clear in your head what it is you want to achieve in the long run with the investment. Is it a retirement package? Is it a source of funding for the education of your children? Is it an escape route from your 9-5 day job? Still, knowing your goal is not just about having answers to the above questions. You ‘ll still be required to be reviewing your plan on a regular basis and make necessary changes based on changes in the market.
Do a lot of research
Research will help put a few concerns out of the way. It is extremely important to be on top of the things that can affect the demand and/or supply of investment property. You need to find out the type of property appeals most to renters and owner-occupiers. Establish the demographic composition as well as the financial capability of the population around the area you intend to invest. You can obtain this kind of information from property managers. Also, check out ads to find out what sells more and use the info to try and predict possible changes in demand in the future.
Condition of the property
Whether you are getting a new or old investment property, always ask yourself whether it is possible to rent as is. It is always a great idea to purchase an investment property that allows you to add value to it through innovations. A new property is not a guarantee that it can be rented as is. If you want to increase the market value of your investment property, always explore the opportunity to improve its condition.
Location
Here are few things that you cannot afford to ignore regarding location. First, establish the investment property’s proximity to the CBD. Secondly, find out the availability of social amenities, transport alternatives.
Do the math
This entails summing up the expenses involved in the acquisition of the investment property. Put into consideration the costs of managing the property, the overheads, and mortgage repayments. If you are planning to rent out your property, then it would be smart to avoid overdependence on rent income to cover the expenses of the property. Consider a worst-case scenario where the property is unoccupied. You should account for such a situation as well.
Choose setup correctly
Consider the implications of the purchase to your financial situation. You do not want to make a purchase that will increase the tax burden on your side. Weigh the options available to you regarding the setup of the investment property. If putting it under your name will result in a bigger tax burden, then consider putting it under a trust.
Pick features correctly
It is going to be in your best interest to pick an investment property that offers the right features. Avoid properties that will cost you more to accessorize as this will affect your income negatively. The best way to go about this is selecting a property offering feature that appeal to a larger population.
Do not let your emotions guide your decisions
You are not buying the property for personal use. So, it makes no sense at all to apply your tastes and preferences in the selection of an investment property. Instead, go for property that guarantees maximum returns.
Timing is important
If you do your research well enough, then you will be a in a much better position to act at the right time. See, what research does is it keeps you on toes and on track with trends and emerging issues in the market. This way, you will know when to make a move and when to stay still.
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