Investment Property Tips for 2014
With low-interest rates and expected double-digit capital growth in Australia’s capital cities, it looks like an excellent time to enter the property market. These are some practical and timeless property investment tips for anyone planning to invest in property in 2014.
Tip 1: Develop a Plan
As with any financial goal, buying a property requires a plan. Your plan is a blueprint for achieving the stated goal. Write down a plan for achieving your property investment goal and break it down to key action steps. These can include saving for a deposit, shopping around for the right investment property, and finding the right investment loan. Add a realistic timeframe for each milestone and start acting on your plan.
Tip 2: Be Willing to Learn
Property is a diverse field and there’s a considerable amount for investors to learn. You can make the learning process fun by taking a class, course or seminar, reading a book or finding a mentor who is willing to guide you in how to buy/invest in the property market. Always keep learning and researching, as the property market is constantly changing. By learning more, you’ll be better placed than other property investors to identify the best investment properties.
Tip 3: Understand the Investment
Always know why you’re buying a property, and avoid going on the recommendations of others unless they are expert. While recommendations or second opinions can be valuable, in the end it’s your investment property and you’re the one who will be responsible for the property. If you don’t understand why a property has potential, it’s a sign that you probably shouldn’t consider buying it without doing further research.
Tip 4: Take an Objective View
Many new property investors review prospective properties as if they themselves were going to live in it. Seasoned investors understand that it’s critical to take an objective approach and evaluate the property as an investment.
As an investor, personal appeal should not matter. Consider how your tenant market will view the property instead, and evaluate each property according to the criteria that your target market will be using.
Tip 5: Find a Hotspot
Finding hotspots with high demand is one strategy that could help you secure a property with high tenant demand and capital growth. Areas with new developments and facilities, inner city areas close to work hubs and new suburbs close to the city are often hotspots that have high capital growth and a steady flow of tenants. Property reports on population growth can reveal some of the potential hotspots in your state or territory.
Tip 6: Do the Numbers
Always do due diligence before buying an investment property. Other than basic research, you may want to work with an accountant to check that your property is viable for you. Doing the sums should provide a comprehensive picture of the cash-flow situation for your new investment property.
Tip 7: Use the Equity in Your Home
If you have equity built up in your home, you might be able to fund your deposit on the new investment property by borrowing against the equity. This can save you time and give you the opportunity to buy a good investment before another investor does.