Investing in property is a fantastic wealth creation tool, and is one of the most common ways for many Australians to invest for the future. However, buying your first investment property can be a daunting experience.
Many first-time buyers learn through hard experience the potential pitfalls of property investment, so take a moment to read this article and save yourself time, money, and stress!
No Substitute for Research
Property investing is relatively simple, which is why so many Australians choose it as an investment option. But only a proportion of these investors make positive returns from their properties, and only a small percentage of those make great returns.
Just like building a home, buying an investment property is all about laying strong foundations early. And for that, there is no substitute for research.
Australia is fantastic for property investors as high-quality publicly-available data from a range of sources can give you a wealth of information about suburbs, house prices, and even demographic data.
Some fantastic resources to start your research include: www.domain.com.au, www.realestate.com.au, www.corelogic.com.au and the Australian Bureau of Statistics Census Data.
It is also important to realise the difference between good research and idle browsing. Research that delivers you good results will be organised, whether that is in a dedicated notebook or a file on your computer, and it will allow you to compare areas, suburbs, and eventually properties, to find the best one for your budget and goals.
Use Local Knowledge
Once you have narrowed your search down the areas where you want your investment property to be, be sure to venture out and do some local research. Simply driving the streets can give you a much better “hands on” impression than just scrolling through Google Maps.
And never underestimate the power of local knowledge, whether that be through the real estate agent or the local café owner, which can often give you more local information that any other source with the added bonus of a nice cappuccino to go with it!
Questions like “what sort of families live in the area?”, “has it changed much over the years?”, and “are you busier than before?” are all great ways to strike up a conversation and find out about the residents, prospects, and growth of the area from those who have the most up-to-date knowledge.
Once you have found a property that you like, it is important to think about the kind of person or family who might ultimately live there. This lets you “look through” the property and plan what you might need to do to make it attractive to a future tenant or buyer.
For example, if you find a four-bedroom home with a large yard ideal for a young growing family, but with no undercover car parking, your “look through” might involve investigating the cost of a carport or garage on the property to make it more appealing for them.
Think About the Future
Ultimately, buying an investment property is a long-term investment. Before you sign any contracts, make sure you think about the situation you might be in three, five, or ten years from now, as it will help clarify your thinking process and decision making.
In addition, plan early to consult professionals like financial planners or tax advisors so you can get sound professional advice about managing your investment and tax deductions that can help you achieve the best returns.
And finally, buying a property is exciting, so be sure to enjoy the process. Best of luck with your property investment journey!