Property is an ever-popular investment in Australia, and for good reason. Property value has soared in recent years, with the median house price rising nearly %400 in the last 25 years. Property is a fantastic investment because it is tangible; you can walk the streets and feel the history in the air. There are generous tax breaks for the clever property investor, too, more reason to play the game.
It’s not all positive in the world of property investment, and there are some hefty hurdles one must overcome to become a landlord. To get started you will need some considerable assets as well as a steady income and good credit history. Here are a few tips for those just starting out on the road to becoming a property investor.
Financing The Deal
Unless you get very lucky or worked very hard, you will need to borrow money to purchase a property. Usually a minimum of %10 of the property’s value is needed in advance. The more you can pay upfront the less your repayments will be, simple stuff. Choosing the right investment loan can be a little ticker.
Depending on your credit history, you will be looking at an interest rate of around %4. These investment loan rates are very low, especially when compared to a personal loan. Before you sign the dotted line, make sure you have read all fine print to avoid any hidden (nasty) surprises.
Investment loan rates are pleasingly low, but they don’t tell the whole story. When looking for the cheapest home loan consider all the ‘other stuff’ and how much value it might add to your loan. You might have found the cheapest home loan, but can you make early repayments? Does the interest rate change next year? These are all questions you need to be asking your lender before deciding.
If, for some reason you are unhappy with your home loan there are ways to renegotiate a deal, but things become costly very quickly.
Let Logic Prevail
One of the biggest joys of property investing is the tangible nature of the investment. Very few investments are as ‘real’ as property, and as a result, it’s easy to think with your heart and not your head. There is no telling what you are attracted too; what odd styling cue will tug at your heartstrings, but when it happens, it’s hard to see reason.
When purchasing a home for you and your family, its impossible not get emotional and attached to your house. When purchasing a property to make money it’s better to buy a property based on research and hard facts, not feelings and nostalgia.
The biggest mistake I see property investors make is being too eager. Investment is not just about planning for the future but taking control of it. It’s important to have a passion and a drive, but this fuel is wasted without planning and patience.
Most property investors will tell you they plan to reach financial freedom through a portfolio of properties. A solid plan, but it lacks details. How long do you expect your investment to take to break even? What time frame do you have for reaching milestones? Do you have any milestones? Planning is key to reaching ay goal and especially so with property investment.
Property investment takes money and a whole lot of time. Do your research and let your head do the deciding, not your feelings. There is a swathe of analytics and data available to you to help you make an informed investment, finding the perfect property is now even easier. If you are a budding investor looking to make your mark on the property market, have fun and good luck, your going to need it.