Top Tips For Property Investment

Real estate is one of the most secure investment one can ever make.While some investors may want to buy a property and rent it out straight away,others may choose to live in the property.Below are some golden rules to consider before taking the plunge into property investment.

Know your budget – Before investing in property,its vital to have a thorough understanding of your cash flow. Also,ask your bank for a pre-approval of your investment loan, so that you know how much you are able to borrow before you start hunting for properties.

Don’t underestimate ongoing costs – Make sure you budget enough for rates,insurance and general repairs. And when you have purchased your ideal investment property, do what you can to prevent costly maintenance issues arising such as replacing ageing taps.

Buy in a growth area – Try to choose an investment property in an area where there is strong demand for rental accommodation.Buying a property close to transport,universities and schools will make it more attractive to renters.

Be realistic about your investment goals – Are you looking for fast capital growth or wanting to hold the property long term? During boom periods,its much easier to renovate properties and turn them over for a quick profit.In slower economic times,it may take many years to achieve the same growth.

Build sweat equity – Paying tradesmen to renovate your investment property is costly.If you are prepared to get your hands dirty you can save money and increase your profit margin by doing the work yourself.

Look for liveable not luxury – Remember a rental property only has to be clean and functional. Don’t get sucked into buying a property simply because it has a stylish interior.

Buy with your head not your heart – When house hunting its very easy to get caught up in emotions. While a home on a steep block may have a stunning view,it could be a nightmare to renovate due to retaining or excavation costs.Be sure to weigh up the pros and cons.

Think carefully before negative gearing – If your repayments on the investment loan wont be fully covered by the rent,your property will be negatively geared. While this can have tax advantages,it can also lead to financial stress if you don’t have enough cash flow to cover the loan repayments, rates or body corporate fees,so consider your budget carefully before buying.

Get a building inspection – Before signing a purchase contract,take the time to understand the building report to avoid expensive repairs down the track.