5 things you must do before you start your investment property hunt
Spring is a fabulous time of year for house hunting. If you’re considering purchasing your first investment property there are some important factors to think about at the start of your search. For assistance in getting your finances inline before making a bid, don’t hesitate to contact one of our STS expert accountants.
In the meantime here are a few of our tips that will help you work towards making a sound investment:
1. Write down your goal
Having a clear financial objective is the first step in finding the right investment property. Know what you want to achieve financially – are you planning for retirement, looking for another income stream, or building equity? This will enable you to assess the property from an investment focus.
2. Do your homework
Understanding which type of property is going to work best for your situation is key. Consider which type of property is in high demand from renters and, possibly, owner-occupiers in the future. Ask McCartney’s property manager to find out what renters are currently looking for, and how their needs may change in the future. Don’t forget to get to know the neighbourhood you’re planning to invest in.
3. Decide if you will buy old or new
Don’t immediately write off a property just because it needs a paint job, but also avoid overcapitalising if it’s not going to deliver returns. It’s a balancing act, so consider your skill levels, the extent of makeover required, and your access to funds to pay for renovations.
4. Choose your ideal location
It’s well known the location of your property is very important. Some of the things to consider include:
-Is the property close to businesses and employment?
-Are there schools and daycare nearby?
-Are the tenants able to walk to a shopping centre, public transport and other facilities such as parks, cafes and/or a gym?
5. Plan your budget
Always check your finances before deciding to purchase a property. It is best to get pre-approval for a loan so that you have your repayment requirements clear in your mind. Make sure you have funds set aside for extra upfront costs such as conveyancing, inspections and taxes. There are also ongoing costs to consider including landlord insurance, strata and property management fees, property maintenance, council rates and utilities.
You need to set yourself a realistic picture of a property’s cash flow, rather than a vague idea of whether rent will cover outgoings, so use a spreadsheet to calculate all foreseeable expenses. It’s important to consider what happens if the property is vacant for a couple of months? Do your sums carefully and always ensure you factor in a financial buffer to avoid any mortgage stress.
We hope these few tips have been helpful in preparing you for your first, or next investment. For personal advice on planning your investment goals, or obtaining pre-approval on a loan, please don’t hesitate to contact one of our expert team.
Just one conversation will help us to identify the tools you need to grow your business or personal wealth.
