4 Things to Consider When Purchasing Your First Investment Property

Buying property, when done right, can pave the way to wealth and create financial freedom.

Whether you’re a first timer or a seasoned investor looking to diversify your portfolio to include property careful, strategic planning is vital to your success.

Here are some of the biggest things you need to consider before diving in to buying an investment property.

Can you really afford to invest?

Before the hunt for property even begins you need to work out how much you can afford to invest and more importantly, how much the bank will lend you.

Seek out a certified financial planner or accountant, to get the most accurate understanding of what you can afford. They’ll conduct a cash flow analysis and crunch the numbers so you can base your decisions and strategy on hard data.

There are several hidden costs to factor in when buying property, which include: financial advice fees, legal fees, building inspections, insurance and ongoing maintenance and repair costs.

Think long term

Smart investors know property investment won’t make them rich overnight. It’s a long term game.

Take one of the most successful investors, Warren Buffett for example, who says: “If you don’t feel comfortable owning something for 10 years, then don’t own it for 10 minutes.”

Get the right advice and outline the best investment strategy

Don’t be afraid to turn to the experts for help. A solid investment strategy needs to be based on data, tailored to your specific financial circumstances. Ask yourself, “Why do I want to invest in property”. 

Finding the right investment strategy for you is really a question of risk versus return. How much risk do you need to take to get a defined outcome? Having a clearly outlining goal of what you are aiming to achieve will go a long way to understanding exactly how much risk you need to take to get there. 

 When speaking about risk, we mean debt levels, tax structures, location and type of asset. Speak to your financial advisor about your risk tolerance. The support of good financial advisors will make you a confident investor, save you time trying to learn and understand technical jargon and help you to avoid making costly mistakes. 

How do you find advisers you can trust? Shop around, meet with a few different advisors and always check their certifications.

Find a mentor

Educate yourself on what it takes to be a successful property investor. Find one of those who have succeeded in property investment and are willing to share their secrets to success through blogs, online community forums, published books and articles. Scour the internet for invaluable knowledge and tips from these mentors.

Treat your investment like a business. When selecting the right investment property to buy take your time to do the research. Gather as much data as possible on the area’s overall growth, housing market, job market and rental demand. 

When inspecting potential properties to buy, don’t get emotionally attached to a particular property, buy with your head. You are not looking to buy your dream home. The property needs to be structurally sound, clean, tidy and well maintained to attract tenants. Speak to family and friends who have invested in property about their experiences. 

Gaining insight knowledge from advisors and mentors can help you identify the best locations and types of property to invest in. Approach your property investment venture as you would entering into a business. It requires a detailed, well thought out plan, strategy and commitment in order to manage it properly and successfully generate income.

For more advice on property investment, visit www.otiumgroup.com.au and download the Ultimate guide to property investing.