Are you struggling to get your head around the property investment market?
It can often seem like a deep dark hole, full of confusing terminology, risk and uncertainty.
Fortunately, with a bit of understanding, knowledge, and the confidence to take action toward your goals, the daunting sensation can turn into one of peace and motivation.
At the forefront of any property investment journey should be a STRATEGIC PLAN to facilitate your every move. This tailored plan aligns with your personal circumstances, helping guide you confidently in the right direction.
In order to ensure that your property investment journey is one of success, here are our top 6 tips!
- Pre-approve your finance
First and foremost, getting your finances in check is the best way to ensure your life as a property investor starts with nothing but smooth sailing.
Pre-approval is a handy situation for anyone looking to buy property. Simply, it means that your lender (bank) is happy to loan you a certain amount of money on a conditional basis. To get pre-approval for a loan, you don’t have to have found yourself a property – instead, it puts you in a great position to move things along quickly when you find your ideal property.
Having a financial pre-approval is also a great way to be sure of your budget when looking for properties.
At the end of the day, it’s important to remember that this pre-approval is conditional, and would still need to be confirmed with the lender prior to the application succeeding. But, you can feel safer knowing that the process is in full swing, and your finances processes are on track!
- Location, Location, Location!
This saying is about as old as it gets – and yet, it still rings true!
When all is said and done, location is the most important factor when selecting a property. Locations that have a high demand, and low supply of new houses, paired with the region or town’s macroeconomic factors, such as unemployment rates and migration patterns.
Ultimately, it’s not about finding a place down the street that looks nice, nor is it about buying an investment in a town that your brother’s niece’s dog bought in – it’s about applying sensible research to your unique situation and goals.
- Understand your cash flows
Having a clear understanding of your finances, in terms of income and cash flow, is a critical factor in taking positive steps on your property investment journey.
When looking at your income and position as an investor, your continuity and reliability of income are important factors. The best way to address this is by ensuring that you have a financial buffer, providing security and peace of mind in the event your financial circumstances change.
Most of the time, when completing your pre-approval, your lender will factor in a buffer for this very reason. So, at the end of the day, it might not be up to you to implement a buffer, but it is critical that you keep it in your mind throughout the process!
- Create Value
When looking for the perfect investment property, another key factor to consider is the idea of creating equity.
In short, this means being able to add value to the property in a short period of time to help bring long-term stability to your portfolio.
We typically see this in the form of new builds and renovations, bringing up the value of the property by adding to what was there before. Some of our clients, with properties in South-East Queensland, have done an amazing job of adding value to their properties by building on land that is in areas of high demand and low supply.
- Negotiate a low deposit.
When organising your deposit and pre-approval with your lender, we tend toward looking at a lower deposit, especially when purchasing your first investment property.
Typically, a deposit of around 10% is what you should be looking for.
Why? Ultimately, it’s pretty simple, using a lower deposit will mean that you have less cash coming out of your hands to get the keys to your first investment. A low deposit will leave money in the bank to help you when the time comes to buy your next property, ensuring that you’re in the best position to keep progressing and growing your portfolio.
The great thing about having an investment property is that your rental income will always be a major help in paying those loan repayments back, purchasing with a low deposit, in an area of high demand, is a reliable strategy.
- Find yourself a strong team
Ultimately, like with anything, a strong performance hinges on having a strong team.
You can’t have a winning sports team without a good coach, or a successful business without an effective leader, so why would property investment be any different.
Your team will help you through each and every stage of the property journey, from figuring out your financial position, to making sure any leaks are repaired, safe and sound.
Here are some key people you may want to speak to throughout your property investment journey:
– Property Advisor
– Solicitor
– Accountant
– Financial Planner
Many hands make for light work, especially when they’re experts in their field!
Being new to property investment can make things feel a little daunting – it’s the same with anything – when we’re not familiar or knowledgeable, we tend to be hesitant. So, at the end of the day, we’re here to provide you with the confidence and understanding that fosters motivation to achieve your goals.
Seeing people build toward, and achieve their financial goals is why we do what we do. At Propell, we’re all about helping you along your unique property investment journey.
If you have any questions, or would like to know more – we’d love to hear from you. Give us a call on 1300 776 735, or send through an enquiry HERE!
