Even with record low interest rates and the exceptional popularity among millions of ‘mum and dad’ investors in Australia, the idea of investing your hard-earned savings in property can seem pretty intimidating. And you’re not alone. Ask any successful property investor and they’ll probably tell you that taking that first step was the most daunting. They’ll probably also tell you that, with the right planning and advice, it didn’t need to be.
So, what does good planning involve? This month we offer our top six tips for taking that first big step towards your property investment ambitions.
- Know your goal and have a plan : It’s important to know why you’re investing. Are you focusing more on capital gain or on a regular income? Obviously, you want both, but identifying your focus will help to pinpoint what kind of property you want to invest in, and where.Working out how you’ll go about investing is the other logical side to this coin, and because this can be confusing to the first-time investor, it’s wise to get expert advice on the different options and how to set out a realistic plan for investing that takes into account timeframes, outlay and future goals.
- Focus on liveability not luxury : As much as we all like to be surrounded by a bit of luxury, when it comes down to it, what most people really want is comfort. If you’re looking to rent your property out (as most investors are) you’ll want quality tenants. This does not mean wealthy tenants drawn to its luxury and prestige. It means tenants who are attracted to your residence because it meets their needs. If it is comfortable, well-maintained, convenient and represents good value, then you’re more likely to have a consistent tenancy. A liveable and affordable home is also likely to appeal to a broader range of tenants, and while a luxury home may have potential for a higher yield, it has a more limited market – and of course, requires a greater initial outlay and potentially higher maintenance costs.
- Find growth areas and understand the market : Discovering ‘the next big thing’ may sound difficult, but with access to more property data and analysis than ever before, good solid research will almost always set you in the right direction. WhiteStar’s own property insights do a lot of the work for you, and signing up to online property forums and analysis sites, checking local growth data, and keeping an eye on major government and corporate planning announcements can also help paint a pretty reliable picture of a region’s potential and the market in general.
- Understand your affordability before you commit :Make sure you know what you can afford. This of course doesn’t just mean your deposit and mortgage, but all the other costs involved in buying and maintaining a property, such as stamp duty, body corporate fees or council rates, landlord insurance, management fees, and an income ‘buffer’ for those times when the rental returns aren’t coming in.
- Understand various benefits of buying an off-the-plan or an existing property : Many investors are attracted to the savings on stamp duty that can be gained by buying off-the-plan. Others however prefer to see exactly what they’re buying before signing any contracts, and thus sway towards existing properties. Both have their definite advantages, and will often depend on what your original plan is. For example, if you’re keen to start getting a regular income as soon as possible, you won’t want to be waiting for your property to be built. On the other hand, if you want some more time to build up your cash reserves, that ‘lag-time’ can come in handy.
- Negotiate with lenders, supported by a team of professionals :The most stressful part of property investing for most people is securing the finance to actually get their property investment underway. With dozens of bank and mortgage lenders out there, all with their own fees, rates and criteria, the whole thing can seem like a minefield to the new investor. In fact, even many seasoned investors find it confusing, which is why they turn to experts such as WhiteStar’s team of experienced mortgage brokers, to get them the best deal for their circumstances.In fact, WhiteStar’s brokers and finance specialists can provide valuable support from the very start of the process. They can help you plan a realistic budget, identify early any potential sticking points in your credit report and even provide guidance on growth areas in the real estate market and help identify the types of properties that are delivering the most favourable returns.
So, while we may have left the most important step till last, the first thing to consider when planning a property investment is to give WhiteStar a call and meet with one of the team, so that you’ll be perfectly equipped for your investment journey ahead.