With property markets heating up across the globe post-COVID-19, there is renewed interest in property investment as a means to generate a hefty profit in both the long and short term. In Australia and across the globe, we’ve seen some major leaps in property value across almost all capital cities, and even smaller country towns, as city residents looking to head out of the Aussie metropolis.
If you’re someone looking to invest in a property, or another high-value asset, then we have some investing tips for you below that might make the process a little simpler and take out a little of the confusion for you.
That said, let’s take a look below at our investing tips when thinking about buying a property.
- Choosing the Right Price
What is possibly the most important part of investing in a property is selecting a home at the right price for the time and the area you’re looking to invest in.
It isn’t a secret that investment is about capital growth, and so you’re going to want to try your very best to snag a deal when it comes to investment in property. As we know, it isn’t a good idea to buy into a home with a price that far exceeds the actual value, as this is going to wipe out a lot of the capital growth you could see in the local area.
With that being said, you should always do your best to scour the web and take a look at a few key indicators to help you determine if you’re getting a good deal on a home or not.
For example, a look at the following will help you spot a good deal or paying a little too much.
- Proximity to schools, public transport, and major freeways
- Distance from major retail and commercial developments in the area
- Future developments in the suburb, including schools, universities, and public transport hubs
- Support for NBN and 5G networks
- The suburb’s general demographics
- Crime statistics
With those points in mind, you’re going to be able to build a better picture of your investment property’s value and determine whether there will be a good chance of growth, stagnation or even a fall in value over time.
One final thing to keep in mind when it comes to value is checking your loan repayments with calculators like the one here. These will let you know whether you can afford a specific price and give you more direction or information on whether you can go a little higher.
- Profit Generation is Key
In line with our value points above, there is a little more to consider when it comes to property.
Unlike with a stock investment or another long-term investment, you aren’t always going to be looking for an income generator, though with a property this is paramount.
If you’re taking out a loan to purchase an investment property, you’re going to want to make sure that your property has rental potential and offers a return that will help pay off all your mortgage repayments, or at least a large sum.
With this being said, we ask that you take a look at the cash flow potential.
If the home you’re looking to buy will take a lot of work to spruce up before renters can move in, you’ll have to be prepared to pay these mortgage repayments in full, with no renter assistance, for example.
You will always want to keep in mind your interest rate, the cost of the home, any ongoing maintenance costs for the property and then tie these to your potential rental income. If it is looking like you will fall into the red, it might be worth looking at a property with higher rental income potential.
- Rely on Property Managers
For many of us, the time it takes to maintain a property and keep up with all the associated tasks is just a little too much to bear when we have busy lives. So, as a tip, we ask that you consider handing off as much of this workflow to the experts – property managers.
These professionals will make sure everything is taken care of for both you and your property and the tenants living in the home. This will mean that workflows such as maintenance work and even finding the right tenant will be delegated to someone with the expertise to do everything correctly, and you won’t typically need to lift a finger.
- Don’t Settle for Any Mortgage
One of our bigger tips for investing in property is to fight for a good mortgage deal.
Though the world of lending seems as though it’s set in stone, banks or lenders are always going to want to hang on to as many of their customers as possible or win over new ones. This means there is a fair bit of wiggle room when it comes to getting a deal, and so we ask that you do two things here; haggle for a great mortgage offer and scour the market, then speak to as many lenders as possible.
With some determination and the time spent assessing multiple lenders offers, you’re going to be able to pit lenders against one another and drive them to a better deal for you.
In line with this, take a look at mortgage rates and determine whether a variable or fixed rate is best for you, and you’ll be on the way to pushing those interest costs into the ground.
- Ensuring the Property is Attractive
As this house or apartment is going to be made use of as an investment, it’s imperative that you make the place look as enticing and inviting as possible to renters.
Not only is this a key point to keep in mind when it comes to getting the highest rental income, but it will also help you have the place rented out as soon as possible. Always remember that time is money in the property market, and the longer your home is sitting vacant, the more time you’re going to have to pay off the entire mortgage fees on your own with no rental income to help you out.
You could work to touch up the home and decorate it on your own if you enjoy doing this and have a knack for interior design and styling. However, you could also hand this process off to the experts, who will have your home looking incredible and renter ready.
- Conduct a Long-term Review of the Investment
Our final tip is to make sure you conduct a complete review of your investment plan and determine how well things will go – and be as realistic as possible.
This step is imperative to make sure that you’re able to financially survive a dip in the market or a prolonged period of little to no growth. Always be sure you can afford to have a vacant home for a fair while just in case of emergencies and have a plan in place should things go south.
In all, risk mitigation and preparation are some of the most important parts of investing in property and be sure to conduct your own risk assessment periodically.
Rebecca is the Content Manager at Extras, a freelance writer, and an avid reader of self help books with a focus on finance. A big believer in taking action, she wastes no time tackling obstacles that lie ahead. When it comes to her endeavors in business and entrepreneurship, she'd rather be stuck with oh well than what if.