How To Break Into The Property Investment Market

Have you been considering purchasing an investment property but are overwhelmed by the thought and not sure where to start?

Purchasing an investment property requires a different approach to buying for yourself and your family. There are a few things that you will need to consider when creating your investment strategy:

• Your own goals and objectives
• Your current financial situation
• How inclined you are to take risks

All of these factors will be different for each and every investor and will have an impact on how you approach the purchase as well as the properties you will look at acquiring. Having clear and concise answers will help to choose the right property to match your strategy and achieve your goals.

Build Your Budget

Just as when purchasing a home for yourself, your first step is going to be assessing your financial situation and building your budget. Go and talk to your bank or mortgage broker, they will let you know where you stand.

Investment loans are different to owner-occupier loans and often have different rates and terms and conditions. The type of loan you choose will depend on your investment strategy.

Expenses will also be a little different than if you were purchasing for yourself.  These can be made up of

• Purchase costs, including stamp duty
• Conveyancing fees
• Property inspections
• Rates and insurances
• Property management fees

You will then need to offset these expenses with what rent the property is currently or likely to bring in.

Educate Yourself on Market Trends

Understanding the property market and trends takes time so be sure to watch both the sales and rental market. Identify the key factors that influence the market such as

• Population growth
• Developments
• Employment opportunities
• Economy indicators

Talk to those in the know. A good Real Estate Agent is a valuable source of information. They should see first-hand what the market is doing and be able to answer the questions you may have.  They may also have knowledge of any upcoming developments that may have an effect on your investment.

Spend time researching what properties in the area are buying and selling for as well as what properties are renting for. This will help give you an idea of what to expect when you are looking and if properties are over your budget.  

Consider Property Management Requirements

You will need to take into consideration what is required to manage the property. Most people will use a licensed property manager. A good

 can help make for a great stress-free experience.  They will ensure that your asset is performing to its full potential and providing the return that it was intended.

They will also stay on top of property management legislation and regulations so you can be assured that your property always meets requirements.

Self-managing a property may seem appealing to save some money however this requires a lot of time and expertise. Most investors say having the right property management is well worth the money. 

They will handle things such as

• Advertising and marketing the property
• Screening tenants
• Rent collection
• Maintenance and repair issues
• Routine inspections and property condition reports

These are all things that can be time-consuming and require a particular set of skills and experience. If you don’t feel you have the time to dedicate to self-management, a good property manager will help ensure that your investment works for you and not the other way around.

Consider property type and location

A strong consideration when purchasing an investment is what type of property should you be looking at? Are you thinking of a house or unit?  A large part of this will be dictated by the budget you are working with.

You will need to look at properties through different eyes than if you were purchasing for yourself. You need to look through it with the eyes of the type of tenant you wish to attract and look beyond what you would typically buy.

You will also want to look at what suburbs fit your strategy. If you are wanting to appeal to families you will want to start looking in family friendly suburbs with schools. 

The location of a property can greatly impact its value and potential income. Properties that are located in less sought after locations can mean lower rental income and possibly lead to difficulty finding tenants, whilst properties in high-demand areas can mean higher property value and better potential for income.

Purchasing any property can be emotional whether investment or owner occupier. You have to remember to keep your emotions in check and think with your head and not your heart.

If you are ready to take the leap and purchase and start creating an investment property portfolio our NXTGEN sales team can assist you in finding a property that's the right fit for you and our property management team can help ensure that your investment is taken care of.