The Dos and Don’t of Investment Properties

The fireworks lit up the sky on New Year’s, and with it you had a brilliant idea – an epiphany really. 

“I want to invest in property this year.” 

That’s right, your long put-off dream of owning an investment property to make some extra cash is going to happen in 2024. And before you lose steam somewhere around January 10, we want to help you reach your goal. But if you’re feeling out of your depth, even approaching the idea of investing can seem like too much.

So here is the basic 101 of property investments. The things you need to know before you chat to your spouse or partner about making your dream a reality.

Wanna invest in a property?

Do:

1. Consider looking interstate and in regional areas.

Last year, 23 per cent of buyers on realestate.com came from another state or territory, and they purchased because they knew the cost of properties elsewhere is less or has greater potential to increase in market value over time. We know there is comfort in buying near where you live but at least consider if it’s the best “investment”.

2. Explore different types of properties.

You may have your heart set on investing in a 100 acre property for your future retirement, but if that’s out of reach don’t be afraid to think smaller. A Granny flat, a unit (or a set), or a share house could be the key to getting you into the rental market.

3. See the possibilities.

Don’t limit yourself to your first perception of a property. Sure, you don’t want to be unrealistic, but think about the way a buyer or renter could adjust the feel and purpose of the property. Just because the house is currently sparse and lifeless due to the changing nature of previous tenants, doesn’t mean it can’t become a sanctuary for a young family if it has a yard, room for a comfy lounge area, and a reasonable kitchen.

4. Research the market in that area

Before you commit to a property, research the housing trends in that area. Is the suburb a hotbed for young families, students or retirees? What is their income, and how long do they normally live in the area once they commit to a rental? Have properties been selling for a reasonable price here recently? How much are people willing to pay in rent? You will want to know all these things before you decide to establish an investment property so you know it has a greater chance of earning you money in the future. 

So you’ve started to research the market, and you’ve found a property you like the look of. Your mind starts going wild – could you renovate? Retire sooner? Move across the country? Maybe. But before you put in an offer, here are the Don’ts of investing in a property. We promise we’re not a killjoy, we just want you to have the best chance of success. So don’t:

5. Assume you will come into the money somehow.

If you don’t have a solid plan to make repayments (including an ongoing source for where this money will come from each month), don’t sign on the dotted line. The last thing you need is more financial debt over your head, especially with climbing interest rates.

6. Assume your bank has your best interests at heart.

Your bank may take advantage of your loyalty and/or sell you on the perceived notion of an easy approval… Don’t take their word for it. Your future depends on it. Do your research and ask your broker to look at whether they are in fact the right choice for you. A little research here means those early retirement dreams may just end up being realised!

7. Invest in a fixer upper or land without a plan.

If your investment is going to require a significant amount of money before it’s even ready to be rented or resold, ask yourself if you are financially and personally ready for the commitment. Do you have the cash to see it through? Do you actually know how much it’s going to cost to finish it? Too often we see costs blow out dramatically. We also know financial stress plays a significant role in relational and family health, so don’t make this process more complicated than it has to be. If you know your investment will require a lot more money and work long-term, have a plan to make this happen and make sure your family is on the same page.

8. Assume this will become your forever home.

An investment property sounds ideal, because we can sit on a nest egg of money from loyal renters over decades, and then move in when we are ready for a sea change. This is a great plan, but don’t stress if it’s not yours. Or, if it doesn’t work out. As the market changes, you may decide to sell earlier. Or, maybe you don’t want to live by the sea anymore! This can still be a way to make money without it being your forever home. 

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Whether you’re a homeowner, investor, or have a dream of one day owning a property you can actually afford, I have your back. Book an obligation free chat with me here and let’s make it happen.

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