On November 5, 2015

Why having an investment adviser matters: Part 1

Property investment is all the craze in Australia as of late.

And why wouldn't it be? Property in cities like Melbourne and Australia have been seeing record high prices and growth due in part to investment flooding the market. Figures from CoreLogic RP Data show that as of 31 August, Melbourne's median house price jumped by 10.6 per cent over 12 months to $755,510. Even more striking is Sydney's yearly growth, which experienced a 17.6 per cent increase to a record high median price of $935,250.

With so much money being circulated around Australia's real estate market, those looking to make serious gains may be enticed to jump right in. However, getting into the property investment market uninformed can be a dangerous thing. There are costly risks and mistakes that can be difficult to avoid without expert property investment guidance.

Hidden expenses

When buying property, it can be easy for an investor to be lost in the excitement of the hunt. It's not uncommon for investors to forget that repayments on the investment property mortgage may be the largest, but certainly not the only expense involved with purchasing real estate.

Things required to bring the home up to scratch such as repainting walls, making repairs and hiring tradesmen to remedy any infrastructure issues all cost money. With the right property investment advice, you can budget and house hunt accordingly to meet your investment goals without suddenly being drowned in unforeseen costs.

Cash spent on installations and repairs can accumulate. Be sure to budget them in when hunting for investment property.Cash spent on installations and repairs can accumulate quickly. Be sure to budget them in when hunting for investment property.

Location

As a first-time investor, it may be tempting to give in to sentimental or preferential bias when choosing property. For instance, a certain suburban terrace may be particularly charming to you, or an apartment unit may have a coastal view that you really love.

However, both of these properties and the suburbs they're in may be unsuitable for your investment targets or capabilities. In some cases, this could even result in negative gearing, which occurs when your monthly expenses end up being greater than income received from the rent. No investor should opt for such conditions purely out of a personal liking or disliking of the property. Unlike buying your home, investment properties must be decided upon with cold hard numbers. 

The Australian Investors Association (AIA) identifies "opportunity risk" in property investment as the risk of missing out on a more profitable investment when choosing another. Steered by knowledge that can be gleaned from The REIN Group's property investment seminars, you'll learn to minimise this by learning to discern in all areas of the investment property market. With the right guidance, first-time investors will be able to choose with their head and not their heart.

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