There is no cookie-cutter plan. When it comes to real estate investing, each property investor will have distinct aims and objectives. For Example:
How will I make money in real estate?
It all comes down to setting your personal goals and then devising particular tactics and action plans to achieve them.
So, we have prepared a list that will help you to grow a substantial property portfolio that would provide you with more options in life while lowering your risks. Here are 7 tips for buying an investment property in Australia-
1. Selecting the right property at the right price
Choosing a property that is more likely to gain value is the most crucial decision you will make when investing in real estate, thus purchasing at the right price is critical.
Unlike shares, where the worth of a firm is transparent, real estate is more difficult to price, yet if you are patient and smart, you may acquire an asset for less than its true market value. The key for you is to do your homework, figure out what everything is selling for in and around the area, and you’ll find that you’ll quickly become an expert at determining how much a property is worth – you’ll recognise a good deal when you see one.
Never contemplate buying real estate in a new location, especially if real estate spruikers contact you promoting interstate or offshore properties.
2. Do the math — Cash Flow is always the king!
Property investment is a proven way to long-term prosperity, but you should consider it a medium to longer-term investment, so be sure you can afford to keep up with your mortgage repayments in the long run. You will not want to sell your investment property until you are ready, and if you are experiencing financial difficulties, it may force you to sell the property at an inopportune moment.
3. Understand the market and the dynamics where you are buying
Consider what other properties are available in the neighborhood and talk to as many people and real estate agents as possible – they’ll tell you which side of the street is preferable. You may get information on typical rentals, property prices, demographics, and suburb reports by accessing unbiased data from a source like RP Data.
It’s also a good idea to find out what changes are taking on in your suburb, and your local government may frequently assist you with this. For example, an extensive building project near your property might make it more difficult to locate a suitable tenant at a reasonable price, or a proposed by-pass could reduce traffic, increasing the value of your property faster than projected.
4. Choose the right type of mortgage for you
For financing investment property, there are a lot of possibilities, so obtain good guidance. Since it may make a major difference in your financial situation. Your decision between a fixed-rate loan and a variable-rate loan will be based on your current circumstances, but you should carefully explore both choices before making a decision.
Mostly the investment loans may be set up as Interest Only (rather than Principal and Interest) to maximise tax efficiency, especially if you have a home loan, but make sure you factor in flexibility. The reason Interest Only loans work well for investment properties is that with a Principal and Interest loan, your negative gearing benefit reduces as you pay down the amount of your loan. You might also want to think about taking up an investment loan that allows you to pay interest in advance or has an Offset Account.
5. Put the equity from another home to good use
Buying an investment property by leveraging equity from your home or another property investment might be a smart way to go. Equity is the amount of money in your home that you actually own. It is determined by calculating the difference between the value of your home and the amount you owe on your mortgage. For instance, if your home is currently worth $750,000 and you still owe $250,000 on your mortgage, you have $500,000 in equity. Though you may take the equity cashout only till a certain LVR based on the bank policy. You may also borrow extra money against your investment property by utilising the equity in your existing home, which will increase your tax deductions.
6. Check the age and condition of the property and facilities
Even if you have negative gearing, needing to rebuild the roof or the hot water service within the first few months of ownership might have a substantial impact on your profitability and cash flow.
As a result, it’s a good idea to hire a professional building inspector to do a complete assessment of the property before you buy (and then once a year) to look for any potential concerns.
7. Make the property appealing to renters
Stick to neutral colours and make sure the kitchen and bathroom are in good shape. If you have a well-presented house, you will attract high-quality renters.
Another topic of contention is whether you should purchase a home that you would be glad to live in or rent it out. Some individuals feel this will increase its value, while others are unconcerned. To avoid being excessively invested, consider distinguishing between your personal house and your investment; remember, it’s your tenant’s home, not yours.
At the end of the day, property investment is a numbers game.
Approach it with sound logic and a detached, objective eye, basing your decisions on an investment plan aligned with who you are, where you are and where you want to be in the future, and you’re well on your way successfully building a multi-million dollar investment portfolio.
World over the investment in property has always been considered a great idea for getting long term returns. As we know generations and generations in Australia as well have built their wealth on bricks and mortar whether its commercial or residential property.
The best mortgage brokers of Nfinity Financials can step you through the whole process, identify the risks and help you formulate a plan to not only minimize the risks, but tackle any hurdles that you may face during your investment journey.
We provide the expert Guide for all your loan requirements. To contact the best mortgage broker, WhatsApp on +61-456-456-267 or visit https://nfinityfinancials.com/contact-us/