Where do I buy my first investment property? The property market is a massive landscape. It can be overwhelming to think, where do I start? There is more assessable information available than ever before, but what you read, can be far from factual. In fact, a lot of online content may be based on opinion. Having more information available, can make your first step to buying an investment property more confusing and overwhelming than it should be.
It is proven by many, property investment is among the most reliable investment strategies. To learn more on why property is the best investment, check out our video. Our principal property adviser, Tristan Markulija discusses it in more detail.
You would think, more information would make for more informed decisions, but unfortunately this isn’t the case. Sourcing advice for an investment property is more important than ever before.
In this market insight we take the opportunity to take note of some points to consider and understand before looking to buy your first investment property.
Learn about the property market
As mentioned earlier, you can’t take everything literal when reading or learning something from the internet. However there are some resourceful people and business that will provide a non-biased approach offering meaningful information. The property market is huge, so learning about the market before sourcing professional advice will make your next steps to buying more productive.
Many people learn differently, but you now have many ways to take the information in. You have written blogs, podcasts, videos and suburb profiles. We particular enjoy listen to podcasts when commuting to and from work, while they are also great to listen to on your midday lunch walk. Take the time to listen to content that is educational without the sales component. The bottom line is you must be careful who you listen to.
Get property advice
Sourcing advice is among the most important aspects to buying your first investment property. A buyer’s advocate is a highly credible consultant who will learn your circumstances and source various properties that meet your budget, objectives and timeframe. Not all properties or locations are equal. A buyer’s advocate will offer you unbiased advice with a joint best interest to find you want you want.
In many cases, your objectives may not be realistic or up to date with where the property market cycle is at. This is where a buyer’s advocate will align your objective to the property market. Once you understand your situation, learn the property market and have a trusted buyer’s advocate, you will be best prepared to buy the right investment property.
Learning what investment strategy suits me
Traditionally, investors only bought one investment property after paying out the home mortgage. Things have changed and strategies have evolved to enhance the financial independence of many.
Not one strategy suits all, but there are a few common strategies highly favourable to investors.
- Buy/hold – buying an investment with a long term outlook has proven to work for decades. The property market has always historically increased over the long term. If you can afford to hold the property, you’ll likely enjoy the rewards in years to come.
- Buy off the plan – This has become widely popular. Owning a brand new property offers great tax benefits, most notably through depreciation. However a new property offers great longevity. Not all investors have the skills to maintain, renovate or upgrade the property. The people who have the skills can also often lack time to do so.
- Capital growth – This comes with choosing the right location. The cheapest property on the market is not the way to generating capital growth. Spending the right amount in the right suburb will pay a larger influence in taking advantage of this strategy. For investors predominately working for capital growth need a good cash flow to cover the property expenses and have a higher risk tolerance. Some growth areas may lack income or vacancies at times.
- Cash flow – When buying an investment, we all acknowledge the benefit of receiving weekly rental income (paid monthly). Sourcing a property that attracts a high weekly rent will reduce your need to cover the loan payments and/or property expenses. Receiving good rental returns is a great strategy to reducing your holding costs, allowing you the ability to hold it long term where capital gains start to show.
- Renovation – For those who have skills to build or renovate, this strategy can enhance the value of a home. Some may look to ‘flip it’, meaning buy and sell quickly to capitalise on the increased value.
These are just a short snapshot of what strategies are available, but there are more to consider. Each strategy needs to be reviewed carefully as they all encounter various risks.
Having a trusted buyer’s advocate will help you implement the right strategy for you.
In Summary
Buying an investment property is an excellent way to enhance your financial future. Having an asset that grows in value and pays you a regular income stream makes property investment great. Like any investment strategy, there are advantages and disadvantages to review in advance.
At Crest Property Investments we offer tailored advice and help our buyers from start to finish. Please feel free to contact us if you’d like to learn more about property investment. We specialise in sourcing brand new and off the plan properties for buyers.
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.
June 2021
