Updated: Mar 26, 2019
Very often property investment is considered a great way to future-proof your retirement, or an opportunity to build your wealth while you are younger.
Although property investment seems pretty straight forward, there are some key things you should keep in mind to ensure that you stay on top of the game. Here is how to take the first steps to becoming a property investment champ:
1. Don’t underestimate ongoing costs.
From council rates through to ongoing insurance costs, investors quite often underestimate the associated costs that come with owning an investment property. Make sure to do a complete assessment of every cost you may face when contemplating the affordability of your purchase.
Keep in mind that as a landlord you are also responsible for any and all ongoing maintenance costs. As a result, make sure that you address any issues early to prevent a snowball effect and increased costs down the track.
2. (Try to) remove emotion from the purchase.
Keep in mind that an investment property is not a property that you will live in and that it is purely for property investment purposes. It is vital that you remove emotion and sentimentality from the process. You need to purchase using your head, not your heart.
Remember for property investment, you are looking for a functional property with good rental returns and solid continued growth. Nothing more.
3. Be prepared to invest sweat equity.
Want to maximise profit? Trades people can be a big dent in your margins. If you are willing to roll your sleeves up and do some renovations yourself, you will ensure you keep your investment property making money. Remember that some renovations must be performed by licensed trades and should not be performed by lay persons.
4. Always get a building inspection.
Getting a professional building inspection before purchasing can be the best decision you will make in the process. Take time to completely understand the building inspection and you will hopefully avoid large financial costs down the track, i.e. termites or mould issues.
5. Put in some thought before you negatively gear.
Although negative gearing can provide some exciting tax returns, it can be a risky prospect for first time property investors. Negative gearing can lead to serious financial stress, if you haven’t correctly analysed your cash flow. You will need enough cash flow to cover excess loan repayments, rates, body corporate fees, insurance, etc. so make sure you budget carefully before buying your investment property.
When it comes to property investment, just like anything else, research and planning will prove to be your key to success. Make sure you show attention to detail, and leverage a wealth of resources and you will be well on your way to becoming a property investment mastermind.
For property investment advice or to discuss your property investment strategies, reach out to us at Silver & Young Private Wealth. We're always happy to talk property!
Phone: 02 9600 7759
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