Investing in property can be an intimidating prospect, particularly if you’re new to the investment game. Here’s a list of some property investment mistakes you don’t want to make.
1. Skipping the research
It may seem obvious, but understanding where and what you are buying will help determine your long-term profits. Conduct some research to get to know the suburb you are looking to buy in, including the demand for rentals, and the local demographic and needs of your prospective tenant. Young working professionals, for example, will be looking for a different property to rent than a growing family. Being clear on your investment strategy and then speaking with professionals in the local area (such as mortgage brokers, real estate agents and financial planners) can help you decide if a particular suburb or property is right for you.
2. Failing to have a long-term plan
Know the purpose of buying your property. Are you after short-term or long-term gains? Are you planning to one day live in the property or is it a straight investment? What type of property will help you meet your income goals? All these questions may need to be answered before you sign on the dotted line.
3. Forgetting the fine print
Make sure you read the fine print, particularly if you are considering buying off the plan, in a modern estate or a heritage building. Once you’ve selected the location or your development project, you’ll need to sign a contract of sale for the purchase. Before signing, it is important that you gain legal advice to ensure that the contract contains all the relevant terms for the purchase.
4. Getting bogged down in the details
Be objective and analytical in your choices. Investment properties don’t necessarily need to be pretty to make money. Location, price and quality of build can trump pristine interior design in terms of long-term value. Take the emotion out of it. If the numbers stack up, then maybe this is the one! Remember: you aren’t going to be living in it, so don’t worry if you don’t like the carpet or the layout isn’t quite what you’d want.
5. Thinking location doesn’t matter as much as it does
Location, location, location - there is a reason we’ve all heard this saying one too many times and that’s because location is important when it comes to choosing property, especially investment property. A good location can impact your chances of securing a quality tenant and also affect how your property appreciates in value.
6. Failing to buy within your budget
Buying, managing and selling an investment property can be costly so considering what you can afford in terms of repayments, ongoing and hidden costs is vital. If there is no way you can afford the property and still live your life, it can get you into trouble quickly.
Some of the costs involved with property investment include: stamp duty, conveyancing fees, legal costs, search fees, and pest and building reports. Then when you own a property you will have to factor in ongoing fees such as property managers and mortgage repayments too.
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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