Property is one of the safest long-term investments you can make. Here’s our top 10 tips to help you move toward buying an investment property.
- Assess Your Investment Goals
Are you buying for a quick financial turnaround or purchasing for a long-term rental? During boom times, it is much easier to ‘flip’ a property for a quick profit. In slower economic times, it may take years to make a profit.
- Find Out Your Borrowing Capacity
It’s important to find out your borrowing capacity first as a loan for an investment property is different to a loan for a home that you are planning to live in. Ask your bank for a pre-approval or assign a mortgage broker to source the best deal for you.
- Budget for Extra Costs & Hidden Fees
Along with the cost of the property you need to factor in additional costs such as: rates, insurance, land tax, stamp duty, solicitors fees, building inspection and, depending on the condition of the property, repairs and general maintenance.
- Do Your Research
As an investor you’ll want to get the most out of your asset, so look for suburbs that are either set to ‘boom’ or are already experiencing steady growth. Some areas in Melbourne’s eastern suburbs that have experienced high capital growth in the last twelve months are Malvern, Surrey Hills and Hawthorn, as well as suburbs near the potential North-East Link – Kew, Balwyn North, Box Hill, Donvale and Ringwood East.
- Talk To the Professionals
Chat to local property managers; find out what areas have strong demand for rental accommodation. Ask about school zones and amenities such as public transport and shops.
- Decide What to Invest In
The eastern suburbs now offer a diverse range of properties from new apartments and townhouses to outer suburb homes with backyards, therefore, you will need to assess your budget and suburbs of interest, as well as decide what type of investment property would most suit you.
- Attend Open for Inspections
When buying any type of property you should view it in person or have a nominated friend, family member or associate do so for you.
- Get a Building Inspection
When you’ve found a suitable property it’s recommended you obtain a building inspection. Building and pest inspections are tax deductible and probably one of the most important things you will do in terms of safeguarding you asset. The inspection should find any structural defects, as well as any signs of pest infestations like termites.
- Weigh Up Positive & Negative Gearing
Borrowing to invest is called ‘gearing’. The more you borrow, the more you will pay in interest. If you have borrowed to invest and you’re making a profit, you are positively geared. If you’re making a loss, you are negatively geared. Either way, gearing is still costing you money and needs to be factored in with your property purchase.
- Manage Your Investment
Whether you wish to appoint a professional property manager or handle the lease privately, management is the key to preserving your asset.
If you’re interested in purchasing an investment property talk to one our of sales team today.