Things to consider before investing in property

A guide to help you understand what’s involved

A bright open plan living room and kitchen area in an investment property

Investing in property is a popular way to build wealth. But it’s important to assess your property goals whether it’s your first investment property or you’re expanding your property portfolio.

Big questions to ask yourself

First ask why you want to invest in property. There are many reasons to invest including positive cash flow or capital growth. What you want to achieve will determine the right investment strategy.

It can sometimes be easy to miss important details or forget a step. This is especially true if you’re a first time investor. You have to ask yourself if you can do the research needed to understand how the property market works. 

Before you invest it’s important to understand budgeting and goal setting. This will help you save for your property and ensure you’re realistic with your finances. 

There are also other costs involved with buying an investment property beyond a deposit and mortgage payments. These could include stamp duty, fees and building reports. We’ve made a list of them so you can plan for these costs. You’ll want to ask yourself if you really understand the costs and if you’re ready to commit to them long term.

Risks of property investment

Property investment brings many long-term benefits, but there are also risks. Carefully evaluate risks before you decide an investment is right. Some disadvantages of property investment and potential risks you may face include:

  • Vacancy - the risk you may not be able to find tenants for your property. This means you won’t have income and will need to cover the costs yourself
  • Tenants - bad tenants could damage your property and become difficult to evict
  • Loss of value - the property market goes up and down. So your property’s value could drop if the market takes a downturn
  • Maintenance - repairs and maintenance may be expensive
  • Interest rates - rising interest rates could impact your ability to afford monthly repayments
  • Costs - stamp duty, legal and real estate agent's fees can make buying and selling property costly
  • Inflexible - it can be difficult to sell a property quickly if you need to access cash in a hurry.

Reducing your level of risk

Savvy investors take steps to minimise their level of risk, like diversifying their property portfolio. This may involve investing in different property types across different states or using other strategies: 

  • Savings - an emergency cash fund can help cover unforeseen expenses
  • Research - helps you understand future plans for the region you’re investing in and any plans that might affect supply and demand and rental yield.

Research and planning play a role in your investment’s success. Speak with an Aussie Broker as you begin your property investment journey and find the right loan. 

Speak to an Aussie Broker 

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