REALas Australia’s most accurate property price predictions
REALas Australia’s most accurate property price predictions

How to get started in smart property investment

How to get started in smart property investment
July 5, 2018 Jayde Ferguson
How to Get Started in Smart Property Investment

If you’re considering climbing the investment ladder, property is renowned as one of the most stable asset classes in Australia. In fact, smart property investment is on the rise in Australia. According to the latest research, small-scale investors own 83% of all investment properties, with home ownership rates at around 70%.

So, how do you get started? When it comes to building a retirement nest egg and setting yourself up for the future, you need a strategic plan. Here are some expert tips to consider before taking the plunge into property investment.

Get Your Finances in Order

The first step to smart property investment is to get your finances in order. Pay down any debts, make sure your credit rating is clean and get your financial records up to date.

Be disciplined with your savings and set aside a portion of your salary each month to go towards your deposit.

The sooner your finances are in order, the sooner you’ll be able to set foot on the property investment ladder.

Find the Best Loan for Your Circumstances

Finding the best loan to suit your circumstances and investment goals is key to the success of your long-term investment strategy.

Take time to research thoroughly into which options suit your situation. Once you have saved for your deposit, seek a mortgage broker to assist you in finding a loan. Brokers will be able to analyse your individual situation and compare the various products on offer from different banks to find the loan situation that best meets your individual needs.

Crunch Numbers

Gain a better understanding of your cash flow by crunching numbers.

Make sure you factor everything in, including the costs involved in the property purchase and ongoing expenses such as servicing the loan, property management fees, maintenance and insurance.

The most common cause of a budget blow-out is underestimating ongoing costs. Budget enough of your salary for rates and have a buffer fund for repair issues that may arise. Other essential costs to include in your budget are stamp duty, building and pest inspections, legal costs, conveyancing, water rates, council rates and strata fees.

Create a Smart Investment Strategy

There are multiple possible investment strategies when it comes to property, and these vary according to the investor’s financial situation and goals. To find an investment strategy that fits your needs, it’s always best to seek expert advice.

To encourage a smart property investment strategy, here are some tips to consider:

  • Explore your options: Weigh up the pros and cons of each strategy before deciding what’s right for you. Always get a second professional opinion.
  • Set clear goals: Determine your short and long-term goals and what your investment personality is. Is long-term profit your strategy? Or would you prefer to benefit from a regular cash flow through a property with potential for higher rental returns?
  • Location: Buy in areas that fulfil your investment strategy. If you’re looking for a property with high capital growth potential, for example, you may want to look at factors such as proximity to transport, amenities and schools to maximise your long-term growth potential.
  • Risk profile: Understanding your attitude to risk will highlight what sort of risks you can and can’t take with property investment. Make sure you choose an investment strategy that fits your risk profile. Whilst a strategy such as property development may seem appealing in terms of potential for profit, this is also a higher-risk strategy and may be something to consider further along in your investment journey once you’ve built up equity, not at the beginning.

Review Your Loan

If you already own a home but are looking to build your property portfolio, tapping into your current equity may be beneficial.

Reviewing your loan before taking the step into property investment will allow you to assess whether the product and rate is still best suited to your needs and objectives. With all the changes that can happen in the lending market, you may find that what was once favourable when the loan was set up no longer works to your advantage.

You’ll need to crunch numbers to determine whether this strategy is right for you. In some cases, reassessing your current mortgage and refinancing can help you secure a better interest rate or enable you to leverage equity that could be used as a deposit for another property. If you choose to refinance, only do so if it puts you in a better position.

Research, Research, Research!

Critical to any property purchase or investment opportunity, you must educate yourself on the area you’re buying into and its demographics.

Once you’ve identified an individual suburb, you will then need to research what type of property is in high demand and choose one with strong future growth prospects.

Your research should involve stepping away from the computer too. Before you go into a bidding war, explore the area in person and keep your finger on the pulse with property market news.

Based on detailed research, you’ll be able to craft an effective investment strategy. This would involve analysing minimum and maximum property prices, properties on offer in the area and how much properties have sold for in the past (to name a few).

This information is paramount to building the best property portfolio for your investment strategy, goals and budget. Property professionals have access to valuable research and possess the expertise to help you make smart investment decisions, so consider engaging the services of a reputable property company.

First home buyers and budding investors should take a measured approach to breaking into property investment. Smart property investment requires time and a lot of research. By keeping well-informed and buying with your head, not your heart, you can start making your way up the property ladder.

Author Bio

This article is written by Jayde Ferguson, who recommends Momentum Wealth. Offering market leading research and advice on the Australian property market, the company helps clients accelerate their wealth through property investment by assisting them in the strategic planning, financing, acquisition, management and development of their commercial and residential investment properties. Catch Jayde on Google+.

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    The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of REALas.