Your first steps toward property investment

Last updated on November 25th, 2021
  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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Investing in property is better than savings, it’s better than bonds, and in some cases, it’s better than investing in the share market. The Australian Securities Exchange (ASX) reports investing in property returns an average of 7% over 10 years as per Canstar. If you’ve been edging towards property investment, you may wonder what your next step is – or your first step. Here is a guide toward a successful investment in property.

Look at your financial situation

This is the absolute first step – can you afford an investment property right now? If you have a stable job, good assets and manageable expenses, lenders and brokers will have a hard time saying no to you. Get pre-approval or unlock your home equity With this information, your next destination is a lender or broker. It’s best to look at all options before committing to one. If you don’t have equity in your existing home that you can tap into, you will need a loan. Get pre-approval so you know exactly how much you can spend on an investment property before venturing into the market.

REMEMBER: Don’t apply for loans often. Applications trigger credit checks and affect your credit history.

Set realistic goals

As mentioned earlier, the average return for an investment property is 7% over 10 years. This means financial freedom for some, a retirement nest egg for others and simply income to offset their own mortgage repayments. Know what you want to achieve, and set measurable milestones for each week, month, year, two years, five years and even ten years. That way you know how you’re tracking.

Understand your risk profile with a budget

With all transactions in life, there is risk. How much risk are you willing to take on, even if the potential return is higher? You should know this by looking at your goals. A sure bet is better than a risky move, if you want all-but guaranteed returns. You should budget to know your income and expenses each month and to help you plan for larger expenses in the long term (for example, a fund for emergency repairs.)

A sure fire way to save money is to look at home loan refinancing options, if you already have a home loan that's at least two or three years down the line. Refinancing to a more flexible or cheaper mortgage product can save you thousands in repayments.

Plan your purchase

Your plan is informed by your goals and budget. You should know whether this is your initial investment, and how you plan to grow your portfolio. You should have an overall strategy to your investment, which include definite criteria to cull the unsuitable properties from the good ones.

Do your homework

Every major purchase you make, you research thoroughly. You should scour the market for suitable properties that fit your criteria, gain appraisals from experts and get all the help you need from outside agents. Know everything you need to know before making a move.

Think of investment like a business

Businesses don’t run on assumptions, they run on numbers. You should think about property investment the same way. Look at the facts, make decisions that will net more money than you invest, and benchmark your progress at every stage. Use accountants and buyers’ advocates to help you through tax, negotiations, and other issues such as negative gearing. After all, investment is good business!

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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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