Taking the leap into property investing can be a sound way to provide for your future, but there are certain pitfalls savvy would-be moguls should avoid. Greater Lismore Branch Manager Jenny Read has some advice which could save you money.
If you’re fortunate enough to find yourself financially able to buy your first investment property, you owe it to yourself to take your time and get it right. The whole point of such a large investment is to reduce the likelihood of financial headaches in the future, so rushing into a decision which has the potential to cause such headaches in the here and now just seems silly.
Here are my top 5 tips for making your first property investment a successful one:
1. Buy Smart
Look to avoid current property hot-spots, as these are usually media driven. By considering areas with longer term potential for real property value growth, you’ll ensure a solid rental income while maximising your resale profit. While established suburbs offer considerable initial rental yield, their potential for growth might not be as high.
2. Know your tenant
When considering an investment property, you need to think about the type of tenant who you will be looking to attract. It’s no use buying a luxury apartment in an area where most people won’t be able to afford the rent. You need to be sure that the price you’ll be looking to charge will be affordable by the majority of renters. Best to stick to the rule that most people won’t want to spend more than one third of their income on rent.
3. Get the right help
While those closest to you might not be short of good intentions, it’s unlikely they are experts in property. Your best bet is to reach out to your financial institution, and maybe even speak to a Financial Planner, who can hold your hand through every step of the process. The Greater is able to arrange a complimentary, obligation free appointment with a Bridges Financial Planner at a time that suits you.
4. Do your math
Unfortunately, some first time investors get in over their heads with properties they can’t really afford. It will be worth your while in the long run to take your time and get the full financial picture on any property you’re considering. Working out now whether or not you can support your investment will be the key to success or failure. You should also budget for periods where the property may be empty between tenants.
5. Knowledge is Power
When you bought your own house, you didn’t just jump into the first house you saw without knowing a thing, did you? So why would you invest without learning more about the subject first? Too many first time investors make the mistake of thinking that simply because they know how to buy a home for themselves, they should be able to invest successfully in property. The two are very different, and you should accustom yourself with as much information about investing as you can before taking the plunge.
The Greater has a range of solutions to help first time investors get off on the right foot, including Financial Planning from Bridges, as well as a range of Home Loans to suit every need, and insurance to make sure your investment is protected.
Make sure you also compare The Greater’s range of fantastic-value Home Loans, and our Landlord Insurance provided by industry leading insurer Allianz.
If you’ve got advice for a first time investor, please share it in the comments below.