You have a plan
Taking on a slapdash methodology when it comes to investing in property can see your property investment crumble before it even takes off. However, if you have a long-term plan on how you plan on establishing your property investment and seeing it grow you are on the right path. This means:
- Checking if you are financially ready by having saved up enough to put down as a down payment and you have an emergency fund in place before taking out a home loan.
- You have researched the ongoing costs that come with it such as maintenance, repairs, body corporate fees, rates and more.
- You have checked various factors and market conditions to know that you are investing in the right property that you can grow in the long-term of things.
- You also have a contingency plan for when things in the property market take a slump.
Your numbers are looking good
Before you take on an investment property it is of importance that you check that you have the numbers to back it up. Having a good level of equity built up is a sign that you are in a good position to acquire an investment property. Even if you do not currently own a home it is important to have a surplus of cash to take care of your property needs.
This can cost you anything between $100,000 to $500,000 and more as an entry point. This also means checking your credit report and score to see if you will be able to take on the responsibility of an investment property.
It’s all about proving that you are stable financially when you approach the banks for a loan. It is better to wait for your numbers to stack up in your favour before taking on a huge financial commitment such as becoming a property investor.
You have calculated the risks that come with it
According to data by ATO, there were 2 million Australians that owned an investment property in 2015-16. This number has probably increased over the years. One of the risks that first-time property investors face is overestimating the risk that comes with investing in property. Not every investment is a good investment, which is why knowing beforehand if the property you plan on investing in is a good one.
Researching the risks that come with becoming an investor is essential. Having an realestate agent on your side and a financial advisor or broker who will be able to give you insight on what options you have and which one will be best suited to your situation can be a worthwhile investment that can prevent you from making a costly mistake.