3 things that you must do before investing in property for the first time

Published on November 27th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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As a first-time property investor, you are probably hearing various things on what to do and how to go about it, but is there such a thing as the right way to getting your foot in the door when it comes to property investment?

The two worst things you could possibly do

With 1,764,924 people in Australia who own investment property, and a patchwork of property markets at play what is the worst thing you could possibly do?

It is being too impulsive or cautious. Acting impulsively on the first house deal that you come across as a first-time home buyer can wreak havoc on your finances and you could also miss out on other great deals on the market.

That is why it is important that you think a deal through, research and compare the market for something that is suitable for you. Acting to cautiously due to the over-analysis of various statistics on a limited market pool can have you overlooking good investment property that can be found in other places either than the big apples.

It could also cost you in cashing in on a house that will make you receive great returns. The only way you can beat such mistakes is by enlisting professional help through a financial advisor and estate agents who will be able to help you make a sound decision. Take your time when investing to make sure that it makes financial sense in your financial decision.

You will have to crawl first

Building a quality investment portfolio doesn’t happen overnight. Biting more than what you can chew by rushing to invest in a property that you cannot afford can create a financial burden for you. Even if owning multiple investments is something that you can afford, it will still be a management nightmare to keep up with.

72.8% of the 1.7 million people who own investment property Australia only own one, while 0.9% of the Australian population owned six or more investment properties. It takes a gradual increase of accumulating more over time. You first need to understand all the costs that come with homeownership and other expenses. The best option is to start off with one property until it is stable and generates enough finances for you to buy your next property.

Get your finances ready

When investing in property even if it is for your personal use you need to see it as a business transaction. Something that you could sell one day, therefore you want to get as much return on the property as possible. This is why it is important to set financial goals after you have found the right property in the right neighbourhood.

Corelogic released some interesting numbers that revealed just how big the property market is in Australia is. It found that the Australia property market experienced a $21.2 billion worth of owner-occupier housing finance commitments of which $6.4 billion were refinances and 11.9 billion of investor mortgages.

When looking to get the key that unlocks your opportunity of investing in your first property it is important that you sit down and work out every cost that could possibly arise from it. This means also considering the changes in the property market. The next step will be to compare various home loans that are available on the market to finding something that is affordable and has the best interest rate.

The same way that you would take your time when investing in a property, and be looking at various angles needs to be applied to a home loan before you end up with a loan that will be hard to maintain.

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This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.

The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.

Approval for home loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.

The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.

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