Property Investing is a popular wealth creation strategy in Australia with over 2 million individual property investors across the country. Buying a property is a big decision and investing in property is a long-term strategy that requires proper thought and planning up front and relies on your ability to hold onto the property for several years.
Want to join the ranks of property investors but don’t know where to start?
Here are 3 steps to successful investing:
Do your research
Where to buy – research where you can buy within your budget. You will also want to think of proximity to transport, local schools, employment, shops, lifestyle elements like parks & restaurants.
What to buy – this involves understanding the demographics of renters in the area. You will need to buy a suitable property that will be in demand. For example, if most renters are families, the properties they will be looking for a property with several rooms and you might struggle to find tenants for a small one-bedroom apartment as there is less demand for it.
Set up a strong team
Before you buy your investment property, it is crucial to have the right team behind you.
Legal professional/conveyancer – who read through your contract of sale, act on your behalf and give you the appropriate legal advice
Accountant – to look after the taxation aspects of your investment property as they will know what can be claimed, depreciated or written off.
Property Manager – start looking early on for an experienced Property Manager who works locally in the same area as your investment property. You will want someone who is familiar with the local market who can advise you what properties are in demand in that area and rental returns. Once the property is purchased, the property manager will be the one to organise to have your property tenanted and manage the property on your behalf. It is crucial for this person to also be proactive and respond to enquiries quickly.
Work out your finances
Speak to your lender or mortgage broker to find out how much you will be able to borrow. Once you have done that, sit down and work out your personal budget to ensure you are comfortable with the repayment amount.
You will also have to work out how much deposit you need. In most cases, the seller will require a 10% deposit. To make the process easier, you can consider using a Deposit Guarantee instead of cash click here to find out about Deposit Guarantees
With the right research, you will be maximising your chances of creating more wealth through property investing. Do remember, property investing is a long-term wealth creation strategy that requires staying power & the ability to keep the property through a few property cycles.