For those who want to get ahead in planning their future and securing their financial security, investing in property is a great option. However, property investment isn’t something that people get taught in school, so many lack the knowledge and experience to feel confident making investment decisions. Here are our best tips for people who want to begin investing in property.
Have a Plan
Waking up one day and simply deciding to invest in property will not work – the best investors have a long term plan, starting from the moment they start saving for a deposit. Goal setting will be a key part of your plan, for example, deciding when you want to have the deposit saved by, or when you want to have an investment property by. To help things run smoothly and to ensure you can reach your goals, you will have to stick to a budget and do research on every step of the process to ensure there are no hiccups along the way.
Getting pre-approved for a loan will ensure you are ready to purchase as soon as you find the right property. It will also save you from making an offer, only to discover you don’t qualify for a loan. To increase your chances of approval, check your credit rating and try to reduce the debt you already have.
Be Aware of the Risks
Many first time investors (and even experienced investors) can fall victim to the common traps and mistakes involved with property investment. Remember to trust your head over your heart, as it can be easy to fall in love with a property that isn’t going to add up in the long run.
The key to successful property investment is finding the right property, at the right price in the right area. The best properties will have steady, positive rental yield and will be located in an area that is predicted to experience growth. The more reliable the rent, the better your cash flow. The higher the expected growth, the more profit you will make if you decide to sell in the future. Features that can affect property value and rental yield include proximity to schools, shopping centres and other public facilities as well as the quality of the kitchen and bathroom.
Manage your Cash flow
Poor cash flow management can be the downfall of any investor, so it is important that you learn how to handle your finances. Before you even consider buying an investment property, you need to check that you are earning enough to help you cover costs and live comfortably. You should also work out how you will divide your working and rental income to pay off your mortgage.
Consult the Experts
It’s always a good idea to discuss your first investment with an expert. Someone with extensive real estate and investment experience (either a professional or even personal contact) is ideal, as they will be able to advise you on where and what to invest in. Once you have bought a property, it can be helpful to have a property manager to handle collecting rent, organizing maintenance and provide you with any property-related advice you may need.
After your first investment, it becomes easier to grow your portfolio. As you become a seasoned property investor, be sure to continue brushing up on your skills and any information you may need to make the right choices and ensure positive returns. The key to being a successful property investor is to simply get started, so go ahead and dip your toes in the property game to secure your financial future.
Author Bio: James Pointon is a blogger at OpenAgent - a great source of information about Australian real estate agents. James believes that sharing one's knowledge is a great way to contribute to society and is often found blogging and sharing his expertise online.