Guide: Your First Investment Property
Is buying an investment property on your priority list?
There’s little more exciting than purchasing your first investment property with hopes of increasing your wealth.
Whether you’ve been considering the idea for a while or you’re just warming up to it, now is a great time to gather the facts.
Why Give Property Investment A Try?
An investment property is land or a building you purchase with the goal of turning it around and selling it for capital gain and/or earning an income from renting it out.
When it comes to making an investment, property is generally considered the safest and easiest to put money into.
Things like stocks and bonds can vary in value with time. It’s possible to lose money overnight. Investment property, on the other hand, depends largely on the effort you put into it. Even purchasing a bad property can still pay off if you make some valuable enhancements.
It’s also a great option if you’re new to investment. This is because you don’t need extensive knowledge of the market to give it a fair go.
Other benefits of an investment property include tax breaks and the fact that you can insure it to cushion any financial blows.
What You Should Know About Property Investment
One of the first things you need to understand is that property is not cheap. Getting started takes a good deal of cash. Before jumping into investing, ask yourself whether you are prepared to handle the costs on top of your current financial obligations, lifestyle, mortgage, debt and so forth.
Your investment property will also be very dependent on your tenants. No tenant means no help towards paying off the property, and a bad tenant could cause you some serious problems.
It’s possible that your mortgage payment will be higher than the rental income, anyway. This is what would make your mortgage “negatively geared” and that’s where you could see tax breaks come into play.
Are you already a homeowner?
The good news here is that you can put the equity in your home towards acquiring an investment property.
Make Your Investment In Property A Success
Talk to your expert team, which may include a mortgage broker, financial adviser and accountant.
Check out seminars and courses in your area that will brief you on the basics of breaking into the investment property market.
Take an analytical approach and avoid making decisions based upon emotion. Do your homework in advance to get a good idea on the history and neighborhood of a property. Design a plan with clear goals you want to achieve as you work towards making a purchase and stick to your plan.
As you examine a potential purchase, be very thorough and personally inspect the area. See the neighborhood through the eyes of your potential tenants and try to anticipate what issues they may run into in terms of comfort, noise and lighting.
Don’t tarry too long when it comes down to decision time.
Two of the biggest rookie mistakes with first purchasing an investment property are:
– Waiting too long to decide
– Not waiting long enough!
Be cautious and learn all you can in advance before taking the leap. But you have to appreciate that there’s no way to be 100% certain you’re making a wise investment unless you actually do it.
By leaving your comfort zone, you’ll give yourself the chance to grow and become more money-savvy.
Where Do You Get Started?
Now that you’ve got some basic starter information, what’s the first step?
It’s all but impossible to navigate solo the confusing web of fees and red tape associated with purchasing investment property. This is even more true in your case if you are new to the market.
You need to get started with some professional financial advice.
Contact our team at Funding Options. We specialise in helping new investors find the finance they require to kick off their portfolio.
– Dom Cassisi, Managing Director