Are you looking to add to or start an Investment portfolio? Here are my top tips for joining the property ladder.
1. Set Clear Goals:
Having a clear investment strategy is key. Know your ‘Why’ – Do you want to replace your wage by having passive income from investments with positive cash flow? Do you want to focus on capital growth to provide a lump sum of cash in the future? Do you need to invest to help offset your salary tax? It is important to understand your goals, to ensure you are choosing the right investment property that will perform the way you want it to.
2. Money, Money, Money:
Lenders have tightened their criteria over the past few years, so it’s a good idea to watch your spending and stick to a budget 3-6 months prior to applying for a loan, particularly when it comes to overspending on luxuries. Talk to a Broker! Don’t assume that the bank you did Dollarmites with is still giving you the best deal. Brokers have access to a high volume of lenders and can often work their magic to find a lender that is right for you. Despite popular belief, you don’t always need to have a 20% deposit – Talk to your finance manager to find out your options. Brokers also charge their fees back to the lender – so it doesn’t cost you a penny to utilise their expertise.
3. Choosing the right Property:
When buying an investment property, it’s important you aren’t buying with emotion. This decision is business. Make sure you do your research – know your market. Understand the population, tenant selection, market trends, supply and demand and growth potential of the area you are looking to invest in. It’s important to be aware of future plans and upgrades to local infrastructure to ensure this area will continue to offer growth for your investment. Also ensure you are looking at the features of the property with a Tenant in mind – would they be comfortable in the home? What is the heating like? How is the home presenting?
4. Effective Management:
Getting the most from your investment isn’t always about achieving the highest rent. There are many ways you can maximise your return while ensuring the property continues to perform for you and remains well looked after. Engaging an experienced and knowledgeable Property Manager reduces your risk and gives you access to a professional who is there to support and help you to continue to achieve your property goals. Read more about what a GREAT Property Manager will do for you here.
5. Rinse and Repeat!
Return to your goals: Revisit and Review.
Talk to your Broker: Can you use equity to invest again?
Do you need to diversify: Consider another location for investment #2?
Discuss your plans with your Property Manager: Often they would love to provide a rental estimate and advice on an additional investment for you.
Investing in Property can be very rewarding, it is a popular way to grow your wealth with assets you can hold on to and develop into the future. The sky is the limit!
Article by Caitlin Horder, Director (Spark Property Management, Launceston).
