The importance of budgeting and setting goals
Thinking of buying an investment property? Setting some property goals and developing a budget are important strategies to turn your plans into a reality.
Property can be so much more than a roof over our heads. It can also play a key role in building personal wealth. However, buying an investment property is also a major commitment, and having a strategy to follow can give you a roadmap to achieve your goal sooner.
Setting formal goals gives you something concrete to work towards. However, it helps to break down your goals across short term (12 month), medium term (1-5 years) and long term (5-years-plus) time spans.
As examples, in the short term for instance, you may want to clear your credit card debt so that you can concentrate on growing a deposit for your rental place.
A medium term goal may be to purchase an investment property that suits your aims and budget.
Your long term goal may be to renovate the property to add value, or even sell the place and use any profit from the sale to buy an owner occupied home.
Prioritise your goals
Multiple goals can muddy the waters, making it harder to understand how you can achieve each target.
Bring clarity to the picture by deciding what’s really important to you, and understand which goal takes top priority across each timeframe. Focus on those goals that matter most to you.
Take small actions to achieve goals
It takes action to transform goals into reality. So think about the steps you can take to achieve each goal across different timeframes.
If you’re growing funds for an investment property for instance, a number of small actions can be taken to help you achieve your goal. These may include:
Set up a regular payment plan to deposit a set amount of moneyper week into a savings account.
BYO lunch to work several times a week. Use the money saved to grow your deposit.
Enquire about the availability of overtime at work to raise additional funds.
Remember, it is a lot easier to stick with small steps rather than larger steps that may call for a major lifestyle change. Create a to-do list of all the actions you can comfortably stick with – and check out Aussie’s Goal Setting Worksheet to bring it all together.
Speak with an expert
Take the what-ifs out of your goals by meeting with your Aussie Broker to get some early insights into how much you can borrow for an investment property and your likely loan repayments.
Budgeting, saving and expenses
Budgeting plays a key role in property investing. Not only can a personal budget help you identify ways to adjust spending so that you can grow save a deposit, budgeting can also help you manage cash flow and expenses once you become a landlord.
Budgeting can bey quite straightforward – it’s all about getting to know your spending habits, and how money going out compares to money coming in. Download Aussie’s Budget Planner to develop and fine-tune your budget.
As well drawing up a budget for your present situation, it’s worth looking at drafting a budget that will apply once you own an investment property. This can give you a good idea of how the rent you’ll receive will contribute to your income, and whether you’ll be able to manage ongoing expenses such as maintenance and repairs, that go hand in hand with owning a rental place.
A chat with your Aussie Broker can also highlight any adjustments you may be able to make to your budget, such as expenses you can reduce, to boost your borrowing capacity or enhance your loan application.
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- Chapter One : Things to consider before investing in property
- Chapter Two : Determining where to invest
- Chapter Three : Investment properties by dwelling types
- Chapter Four : Finance for your investment property purchase
- Chapter Five : How to invest in property
- Chapter Six : Adding value to your investment property
- Chapter Seven : Positive and negative gearing
- Chapter Eight : Getting your loan
- Chapter Nine : Selling your investment property