Property Investing – A Checklist

  • Posted 12 Dec
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Property Investing – A Checklist

We all admire the Donald Trumps of the world, those savvy real estate moguls that made their fortunes in real estate.

How did they all do it? Well, they always say it started with a simple property investment that they scaled into an empire.

Is property investment for you? It certainly can yield great dividends. It’s a very tempting route to grow your investment portfolio, and especially as interest rates are at record lows.

But are you really in a financial position to become a property investor? We’ve created a checklist to see if you are so you can make an informed decision.

Where are you at financially?

First, ask yourself, what can I afford? Buying a house, or any kind of property is going to be a huge investment, and you’re going to need to be in the right financial position to make it work.

You’ll need to do a full review of your financial state. How much debt are you carrying? How much would you need to borrow and how much can you afford to save? The answer to these questions will dictate whether or not you’re really in a position to start investing in property and get a loan.

You’re going to need money to make the purchase, as well as money for cash flow. Typically this breaks down to 20% for the deposit, 5% for stamp duty and legal fees, as well as some buffer for costs you haven’t taken into account.

It’s always recommended to have around $10,000 as a buffer. This way, even if you can’t afford to pay costs from your wages, you’ve got the cash to back things up.

Plan Ahead

Ok, so let’s assume you have the financial freedom and savings to be a property investor. Now you need to ask yourself, do I have the time and energy to put into my property investment?

It’s going to require a serious time and cash commitment. Really, you’re starting a business, and as such you should have a business plan in place.

Seek out a team of knowledgeable professionals to act as advisors. Look for a mortgage broker or bank to assist in structuring the investment, as well as a financial planner to help with budgeting.

Go after it!

Don’t wait for the perfect moment to make your move on an investment. There will never be a perfect time. If you’ve done the two steps above and know that you’re ready, than you’re ready to make your move and buy that first property.

Expect the Unexpected

Prepare for the worst-case scenario.  So many variables are involved in your property investment, and therefore, there’s that much more that can go wrong.

Interests rates may rise, tenants may leave your properties in a terrible state, and costs can come up that you never factored in.

Interest rates are low, but they may not stay that way. You should always be alert as an investor, looking around the corner to assess any changes that may be coming your way so you can plan for them.

If you’ve gone through the checklist and decide property is worth the risk, then you may just be on your way to becoming the next Trump!

Need some help determining if property investing is for you? Not sure what type of finance is available and whether you need a deposit? Chat to our team today to discuss your options.

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