There are a variety of reasons people get into property investment. For some Australians, it's an interesting hobby, a strategic way to pass the time, but at the end of the day it's just a good way to make some extra money – especially if you invest wisely.
If you can break into the right neighbourhood, you stand to make quite a bit of money. Of course, that is much easier said than done. The property market is ever changing, so if you're new to the industry, you'll need some tips on how to secure the best investment opportunity. CoreLogic Pain & Gain report has data on how many properties sold at a loss last quarter. According to their research, the average loss was $71,529 – that came out to be about 9.4 per cent of national dwellings that were resold for less than their previous purchase price. While the profit on resale increases was $262,672, you still want to avoid the risk of falling into the losses!
That said, we're here to help share some tips of the trade that will help poise you to make a smart decision on your first investment.
1. Assess your financial situation
Before you make any major financial decision you need to know what your finances look like. Once you've done a thorough examination of your situation and obtained professional financial advice you'll be able to determine the property investment package, strategy and solution that will best suit your economic position.
In this stage, you should also make clear goals. Things like what your maximum spend is, what type of property you're willing to invest in, and a hard deadline (if applicable).
Your next step is to investigate the property first-hand.
2. Do your research on where you want to buy
Now you can decide where you want to invest. This can be broken down into two main areas: where to buy and what to buy.
Once you've identified the markets and neighbourhoods you want to invest in, your next step is to investigate the property first-hand. Take a walk around the block, chat with the residents and eat at a nearby restaurant. There's really no better way to understand a neighbourhood than to visit it yourself. You can also go through the checklist of signs that show a neighbourhood is ready to grow. Here's a short list of things to look out for:
- Outside richer neighbourhoods for spillover
- Proximity to public transportation or parking spots
- Plans to rezone projects that could be turned into more housing
- Trendy restaurants or cafes
- Presence of artists or musicians (aka: people looking for cheap rent)
3. Get to know the seller
Developing genuine, personal relationships has always been the golden rule to many of life's successes, and property investment is no different. You'll have the upper hand over other potential investors if you take a little extra time to get to know seller, as well as their motives for selling their property. This is a good way for you to learn more about the neighbourhood so you can decide if it is truly the right investment for you. Should you decide to move forward, the personal relationship will only help move you to the front runner position.
You can't play the usual game of low ball – sellers know how much their property is worth.
4. Be realistic
When you get into the property market you have to realise that everyone there likely knows a lot more than you – even after all your research. You made a budget for a reason, and due to the unpredictability of the property market, you should absolutely stick to your number and don't let anyone bully you out of it.
This advice is especially true when dealing with hotspots, you can't play the usual game of low ball – sellers know how much their property is worth and they aren't going to waste time on jokers.
5. Don't go in alone, work with a professional
Truthfully, you won't be able to make this investment on your own. Few become property experts without extensive education and experience. Professional advice will help you fill in the gaps of all the minute legalities you likely won't be aware of on your own.
You need someone who you can trust. The REIN Group has extensive experience in helping our clients grow their investment portfolios with a personal touch that other agencies just can't boast. Our industry professionals will help you make your first step into the world of investment property with advice that is tailored not just to the market, but you as well. Contact us today to start building a successful portfolio.