Are you ready for property investment? No doubt, Australians are aware that
property investment is among one of the best investment assets to own. Having an asset that pays you a monthly income stream (rent) and overtime grows in value, what a great asset class to be involved in.
It can be a running conversation at a friends dinner table, but having the courage to make the next steps to buying your first property investment, can make you feel nervous and uncertain. This is quite understandable, when you are likely to spend up to ten times your annual salary on an individual asset. Taking the leap of faith is difficult, but once you get past the emotional hurdle, it gets easier every time you look to extend on your property portfolio.
Here are four tips that will help you understand if you are ready for property investment.
1. Have you got sufficient cash saved or accumulated some equity?
When buying a property, you may need anywhere between a 10% – 20% cash deposit. This deposit can also come in the way of equity in another property you may own (family residence or investment property). Having a property deposit can often be the biggest hurdle in being ready for a property investment. In order to accumulate a sufficient deposit, you need to implement a good cash flow (budget). Find out what you earn after tax and deduct your cost of living. It would also be a very good idea to make sure you add entertainment into this budget. Saving for a deposit is important, but you also need to enjoy your life along the way!
2. What is your borrowing capacity?
It is a great start to have an accumulated deposit to purchase a property investment, however this does not guarantee you a loan approval. Before you start searching for a property, you should get a pre-approval from a lender so you can ascertain how much you are able to spend. If the borrowing capacity is low, you may need to review other alternatives to get yourself into a position to buy. This may be saving for a larger deposit, earning more money in your occupation or perhaps reducing some existing debt. There are many variables that can influence the bank’s decision to what they will offer you. Working with a
mortgage broker would be a great trusted partner.
3. Property research
Not one property suits all, nor does the property type. If you have a lower budget, you need to take this into consideration. Some investors may rely more on the rent to support the property outgoings and loan payments, while others may have a good loan serviceability and want to focus on capital growth. The property market is a massive asset class. It would be ideal to seek advice from a property adviser. At
Crest Property Investment, we source brand new and off the plan properties for buyers. We believe these are very well suited to investors as they require lower maintenance, offer
higher rental income and provide higher tax benefits just to name a few. There is a point were to much research can confuse you and make the decision harder. Seeking professional advice and reading the research they do on your behalf is a very sensible way to approach this. Don’t forget to take into account the property outgoings when doing your research. You will need to make sure you can afford to keep the property too.
4. Are you ready for extra responsibility
Buying a property is a big decision regardless if its your first property investment, your third or your tenth. It is not just the financial commitment, it is also choosing the right property manager, tradespeople for any potential maintenance and insurance. Employing a professional investment team (trusted professionals) will help you build and maintain your portfolio. Having a network that consult each other on your behalf will make this a seamless process and a more rewarding opportunity too.
What to do next?
If you’d like to learn more about buying an investment property, please don’t hesitate to
contact us. We would welcome the opportunity to help with your property purchase.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more please contact us. We welcome the opportunity to assist you.
December 2023
