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7 Tips For Investing in Property

7 Tips for Investing in Property

Buying an investment property can be a great way to invest, but there are numerous factors to consider before you buy. From deciding what you want to get out of the investment, to choosing the right property, to making sure you can afford it, to deciding how you will rent and manage it, here are the top seven factors to consider before investing.

Setting investment goals

As with any type of investment it’s important to work out what you want from your property investment, and to set goals to achieve within a certain timeline. Do you want to supplement your income, retire early, or expand your property empire? Set goals and ask yourself how you are going to achieve them.

You may benefit from talking to a financial planner to look at your overall goals and help you set an investing strategy. They can also help you find ways to pay your own home faster.

Choosing the right property

Before you start looking at properties, think about what kind of tenant you want to attract. If you want uni students as tenants, a property with more bedrooms close to the uni would be best. If you want young families as tenants, choose a property away from a busy street, close to parks and schools. Choose the right area and the right property to attract the right tenant.

Investing in property is generally all about capital growth. If you want your investment to grow, choose a property that will increase in value. Always buy at the right price.

Working out what you can afford

There are numerous costs to consider as a property investor. Take into account the price of the property, the mortgage repayments each month, and any upfront costs such as stamp duty and legal/conveyancing fees. Use a home loan calculator to work out what you can afford, and create a budget of all your incomings and outgoings. It’s a good idea to have a substantial deposit and a backup fund for emergencies.

Factoring in ongoing costs

As a property owner, you will be expected to cover various ongoing costs. If you choose to let the property through a real estate office, they will usually charge 5-10% of the annual rent for their services. You will also need to take into account the interest you will pay on the mortgage, insurance costs, rates, body corporate fees, and the cost of repairs. Bear in mind that there are several tax benefits to owning an investment property – speak to a professional to find out more.

Choosing investment over personal choice

When choosing your investment property, remember that you are not living there. It’s not your “second home”, it’s a property that tenants will live in, so it’s got to suit them – not you. Choose a property that will offer you the best return on your investment over anything else.

Getting the right advice

If this is your first investment property, things can get a bit confusing. Choosing the right loan, the right property, knowing what you need to do as a landlord – it’s not always easy. Getting professional advice can be extremely helpful. The services and advice of a mortgage broker can be invaluable as a property investor.

Choosing the right loan

There are different loans available for property investors. With big changes to lending in 2015, investment lending has become a little more restrictive. If you have the time and patience, you can search online for the changes to these loans.

Alternatively, a mortgage broker could help you work out what you need, and search for loans that will work for you. The broker can also advise you on what you need as a property investor, and can guide you through the loan application process. Here is a little more in information on Investment Loans.

Lend Me – Investment Loan Brokers – Perth, Western Australia

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